A question clients often ask is
“Can I get more life insurance in the future if I need it?”
My answer is
“Yes, but you’ll have to answer medical questions….unless you can use the guaranteed insurability option”
The response is invariably
“What the hell is a guaranteed insurability option???
Don’t worry; it’s less confusing than it seems.
Let’s break it down in plain English.
Guaranteed insurability (also known as the life events options) lets you increase your cover without the need to undergo medical underwriting.
But you can only use the option in certain circumstances:
Some insurers offer it on mortgage protection and life insurance policies.
But be careful because other insurers only offer it on either life insurance or mortgage protection.
As always, read the fine print!
No, one of our providers doesn’t have restrictions.
This life company will allow a policyholder to increase their cover by 20% every three years, up to 5 times without answering any medical questions.
But this option does incur a small extra charge.
Unlike a conversion option, you don’t have to pay an extra premium to add Guaranteed Insurability.
Last week Sarah rang me looking for advice.
She had a baby last year, so her current apartment was no longer suitable for her needs.
As all new parents know, your baby is born with a magical ability to shrink your house in a matter of days.
Sarah required a mortgage of €65,000 to buy her new home (after selling her old one). She had mortgage approval, but her bank wouldn’t let her increase mortgage protection without doing a full medical.
Unfortunately, Sarah had been recently diagnosed with Multiple Sclerosis.
I ran her case by my underwriters at the other insurance companies but didn’t have any joy. Nobody was willing to offer her insurance as the MS diagnosis was so recent.
Believing I had exhausted all options, I was about to give up but then thought
Maybe she has a Guaranteed Insurability Option?
Feeling confident I had found a solution, I called Sarah and asked her to check with her bank whether she could exercise her life events option to increase mortgage protection without doing a medical.
“Computer says no”, was their fairly predictable response.
Never being one to trust banks, I asked Sarah to find her policy documents and email them to me.
In large letters on her policy cert were the words:
Armed with this, Sarah went back to her bank… …she has been approved for the extra €65,000 without the need for medical evidence and can now buy her new home for her new baby to wreck!
1) Don’t trust your bank – always question them.
2) If you’re getting nowhere with your bank, get some independent advice from your financial broker. A fresh pair of eyes may help.
The Guaranteed insurability Option varies between lenders:
Maybe you’ll experience ill-health in the future, and because of that, you’ll presume you can’t get more cover.
But if you have guaranteed insurability built into your cover, this is not the case.
It’s something to seriously consider when choosing your insurer.
If you’d like to know which insurer I recommend for the guaranteed insurability option, please get in touch using the form below.
Or, if you prefer to schedule a call that suits us both, click here to open my diary and arrange a free 15-minute phone call.
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