Guaranteed Life Insurance

Why guaranteed life policies are a double edged sword.

Guaranteed life insurance policies are usually targeted at older consumers; they mean that you will be guaranteed life assurance, and usually without any medical examination. This can be a benefit, but if you are generally healthy, a broader base insurer may be cheaper.

There are some circumstances in which most ordinary companies will turn down your application for life insurance. Taking an extreme example, a life company is unlikely to accept a 104 year old on their deathbed; because the company knows full well that there’s every chance they will have to pay out within a matter of days, after receiving only one premium! It’s a gamble the life company won’t take. In reality, most life companies have an age limit of 50, 70 or 80 years of age.

The term “guaranteed life insurance” has come to mean one or both of two things: firstly a company which will indeed accept clients from any age group, and secondly that they will usually accept them without a medical examination. Before applying for a guaranteed life insurance policy, (often these are called “Over 50’s plans” too), be aware of two things. Firstly, you will usually pay slightly higher premiums, as you are being bundled in with other people who pose a higher risk. So, try to get ordinary cover first. Secondly, there is something of a cheek going on here. Many applicants take these policies purely because they find a medical examination embarrassing- there is actually nothing wrong with them at all. Again, you will be sacrificing money for this slight inconvenience. If you really can’t find cover elsewhere, a guaranteed life insurance policy might help; but do talk to a financial adviser first, and check out companies like SAGA which specialise in services for the over-50’s.