Key Considerations About the Guaranteed Insurability Option
Policy Limits: The total increase allowed over the policy term is capped, typically at the lower of €200,000 or the original level of cover. This means you should carefully plan when to use the GIO to ensure you maximise its benefits.
Age Restrictions: The GIO usually ends when you or the older person in a joint life policy reaches age 55. Therefore, it is crucial to consider your life insurance needs earlier rather than later.
Premium Adjustments: While the GIO allows for increases in cover without medical checks, your premium will be adjusted accordingly to reflect the higher level of cover.
Case Study: Life Insurance Increase Despite a Chronic Illness
Background:
James, a 42-year-old software engineer in Carlow, initially took out a life insurance policy in 2016 to cover his mortgage. James and his partner recently had a child, prompting them to move to a larger home, which required a bigger mortgage. James sought to increase his life insurance cover to ensure the new mortgage was covered.
The Challenge:
James had recently been diagnosed with a chronic illness, making it unlikely he would pass the medical underwriting required for increasing his insurance cover.
The Solution:
Fortunately, James had included a Guaranteed Insurability Option (GIO) in his original policy. This option allowed him to increase his cover without undergoing medical underwriting as long as the increase was due to a qualifying life event, such as taking on a new mortgage.
Outcome:
James successfully increased his life insurance cover to match his new mortgage without facing the hurdles of medical underwriting, thanks to the GIO. This ensured financial security for his family, despite his health condition.
This case underscores the importance of including features like GIO in life insurance policies, providing crucial flexibility and protection when life circumstances change.
Do All Insurers Offer Guaranteed Insurability Option?
Not all insurers offer the Guaranteed Insurability Option, and even among those that do, the terms can vary significantly.
Some insurers provide it across multiple products, including life insurance, mortgage protection, and income protection, while others may limit it to specific policies.
The maximum increase allowed, age limits, and other conditions can also differ, so it’s essential to compare policies carefully.
Can I increase my life insurance cover outside the guaranteed insurability events?
If you want to increase your life insurance cover beyond the specified events listed in your guaranteed insurability option, you will generally need new underwriting or even a new policy.
The only exception might be if you recently took out the policy and are requesting a small increase. In that case, you may only need to answer a few health questions covering the time since you first purchased the policy, but approval is still at the insurance provider’s discretion.
Is there another way to increase my life insurance cover?
Consider adding an Indexation option to your policy. Indexation allows your life insurance cover to automatically increase each year, typically in line with inflation, without requiring new medical underwriting.
This feature helps maintain the value of your policy, providing adequate protection for your loved ones as the cost of living rises. By adjusting your cover to keep pace with inflation, you can ensure that your beneficiaries receive enough financial support when needed without the risk of your policy’s value diminishing over time.
By reading our article, you can learn more about the indexation option and how inflation can impact your life insurance payout.
Get a Life insurance Quote with LowQuotes
We at LowQuotes do the hard work for you by shopping around for the best prices from the best life insurance providers in Ireland.
Our goal isn’t just to find you the cheapest option but also to provide personalised advice to ensure you choose the provider that best suits your unique needs.
Whether you’re looking for comprehensive coverage or the most affordable plan, our expert team is here to help you confidently make an informed decision.
We also provide various financial services, such as mortgages, serious illness cover, pensions, financial planning, health insurance, and savings & investments.
Publisher: Source link
