Guaranteed life insurance policies explained
Everything you need to know about guaranteed life insurance – the no questions asked life insurance designed for older people
What is guaranteed life insurance?
Guaranteed life insurance is a type of life insurance designed for over 50s. Like other life insurance policies, it provides a lump sum payment to the person of your choice when you die.
However, unlike other forms of life insurance, it does not involve having a medical examination or answering lots of questions about your health – making it accessible to those who would otherwise find it hard to take out life cover.
How does guaranteed life insurance work?
As with other forms of life insurance, you must pay regular premiums to maintain a guaranteed life insurance policy. If you stop paying the premiums, which are set by the policy provider and usually remain the same throughout, you’ll lose the money you’ve paid in so far because the policy won’t pay out on your death.
You can usually take the cover out with immediate effect, after which you have a ‘cooling-off period’ during which you can cancel the policy without losing any money. However, given the lack of medical checks, many insurers will refuse to pay out the full amount if you die of ill health soon after buying a policy.
What are the pros and cons of guaranteed life insurance?
The main advantages of guaranteed acceptance life insurance are:
No medical checks: You will often be refused standard life insurance if you have existing health problems such as a history of heart attacks or strokes, but with guaranteed life cover this is not an issue
No lifestyle questions: Lifestyle choices such as being a smoker will not affect your premiums
Guaranteed payout: Most policies pay out a fixed lump sum whenever you die (outside the first 12 or 24 months of cover)
Fixed payments: Most policies come with fixed premiums that remain the same throughout the policy term (if you live beyond a certain age – say 90 – the premiums may even be waived for the last years of your life)
The mains disadvantages of guaranteed acceptance life insurance are:
Higher costs: Guaranteed life insurance premiums are often higher than those on standard life insurance policies. This is due to the potentially higher risks the insurer is taking on by not checking your health
Limited pay-outs: Many policies limit the payout you can leave to your loved ones, often at around £25,000
Minimum terms: If you die within a year or two of buying the policy, your loved ones will often receive the value of the premiums you’ve paid so far, rather than the full payout (unless you die in a accident)
Does guaranteed life insurance always pay out?
Guaranteed life insurance should always pay out when you die within the policy terms. However, most insurers include a minimum term in the conditions that means your beneficiary will only receive the amount you’ve paid in premiums if you die of ill health within a certain time.
The time this condition lasts varies from one policy to another, but is usually between one and three years from the date you buy the policy.
Can I put my guaranteed life insurance policy in trust?
Yes, you can put a guaranteed life insurance policy in trust. The most common reason for doing this is to prevent it being considered part of your estate for inheritance tax (IHT) purposes – although this is only a concern if the value of your estate is likely to exceed the IHT threshold.
What’s the maximum age I can take out guaranteed life insurance?
Most people who take out guaranteed life insurance are over 40 – while many are over 50 years of age. The upper age limit on policies of this kind varies between insurers, but is usually between 75 and 100.
Do I need a medical exam to take out guaranteed life insurance?
No, that’s why guaranteed life insurance is also known as no questions asked life insurance, and is popular with people who might otherwise struggle to get a policy – usually due to pre-existing health conditions.
Not having to have a medical exam also means you can take out a guaranteed life insurance policy within minutes, as there’s no need to wait for the test results to come in.
What are the alternatives to guaranteed life insurance?
The main alternatives to guaranteed life insurance are:
Standard level term life insurance – this type of cover costs the same amount each month for a set period and pays out a fixed amount if you die within that time
Standard decreasing term life insurance – this is a cheaper option that also lasts a set period but has a payout that goes down over time (in line with your mortgage for example)
Standard increasing term life insurance – a type of life insurance with which the payout increases each year, either by a fixed amount or in line with inflation
Whole of life insurance – usually the most expensive type of standard life insurance, this type of cover also pays out a fixed amount whenever you die (as long as you keep paying the premiums)
If you’re in a couple, you may also want to consider taking out a joint life insurance policy, rather than two single policies.
Compare over 50s life insurance
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You can compare quotes by the overall cost and the cover you’ll get – and once you’ve found the one you want, just click through to the provider to finalise your purchase.