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All insurance requires a certain level of information so that the insurance companies’ underwriters can analyze, evaluate and price up an insurance policy. Let’s say you’re looking for an insurance policy to cover a yacht. For underwriters to give you a decently priced quote, they would want to see the vessel in a good condition, with a responsible owner. If it turns out the hull is rusted and the captain tends to run it aground from time to time, the underwriter will either charge a very high premium or perhaps not even offer an insurance policy at all. The same is true for life insurance. There are many questions that one will find on the application form to a life insurance policy. Age, medical history, current health, life-style questions. All of these go to informing the insurance company if they want to form a contract with you, and whether you fit their appetite of risk.

Should they deem your answers as unsatisfactory in this regard, it could make it difficult or indeed impossible to find an insurance provider that wants to sell you life insurance. And many people do indeed find it difficult. If you’re on the older end of the age spectrum, a smoker and with a family history of poor medical health, you could find yourself with limited options when it comes to purchasing life insurance. However, this is where guaranteed life insurance comes in.

So, if due to your personal circumstances or individual history you’re finding that your life insurance options are few and far between, guaranteed life insurance might be for you. Let’s look at what this type of life insurance policy could mean to you.

What is Guaranteed Life Insurance?

With some of the intense medical questioning that comes with a life insurance policy, these insurance providers can be some of the most selective out of all the other insurance products. However, it might be surprising to hear then that some of these providers offer “guaranteed life insurance”. What this does is essentially provide coverage on the basis of “no questions asked.” You apply with some cursory details such as your age, address etc, but there is no need to answer any intrusive questions. Why? Because these life insurance policies guarantee to offer you a policy. There is no chance of rejection or being declined a policy, and without the need for a medical, you can be sure of being able to purchase an insurance policy that will take care of your family and dependents after you’re gone.

Why Would I Purchase it?

A troubled medical history does not make for easy-reading when it comes to an insurance company looking at taking on a new life insurance customer. If you believe you have a health issue that means you could never qualify for a policy that requires medical underwriting, guaranteed life insurance could be what is right for you.

Another reason to purchase this type of life insurance policy is that perhaps you need life insurance in a hurry. Other insurance companies who are more selective in their customer base life policies will ask more questions, need more answers, and take their time to price up your application. Indeed after all that time you might still not qualify. Guaranteed life insurance is usually a much quicker decision for the insurance companies that offer them, since they have the business model that can cater to those who apply. Indeed that coupled with a lack of in depth medical questioning means they can offer far more instantaneous quotes to their prospective customers.

The Drawbacks of Guaranteed Life Insurance

If you’re unsure about whether your medical history disqualifies you from the majority of life insurance policies however, it’s still worth applying for a few life policies just to make sure. The drawbacks of these guaranteed acceptance policies are that they will usually be more expensive, since there is a lower barrier of entry. Pursuing a policy which requires a thorough analysis of someone’s medical history might result in better premium prices for the policyholder than that of a guaranteed life insurance policy.

The other disadvantage is that the total payout available might also be lower than that of other policies that require a more in-depth medical examination. Whilst some life insurance policies can offer coverage limits of up to £20m, you might find guaranteed life policies that only have limits up to £10,000.

Considering how easy it is to conduct a survey across the life insurance market via a price comparison site or using a specialist insurance broker, most people should at least start with seeing if they can qualify for a traditional life insurance policy having disclosed their full medical history.

Who Guaranteed Life Insurance Policies Are Not Suited For

A guaranteed life insurance policy is not necessarily suited for people under several situations:

  • With the lower coverage amounts available for these policies, a guaranteed life policy might mean the policyholder ends up putting in more premium than the payout they receive. This is especially possible if the policy is a “fixed cover” policy, where the payout at the end of the policy is the same as at the beginning - this means the policy is at risk of devaluing itself due to the effects of inflation.
  • Policyholders with a good medical history and who are young will find themselves at a disadvantage when it comes to pricing and the terms & conditions of these guaranteed life policies. These policies tend to assume everyone to be in an average (if not worse) condition of health. That being the case, you won’t receive preferential terms or premiums that you might have otherwise. If you believe yourself to be in good medical health, are young and do not have a history of family illness, it will most certainly be better to go through the traditional life insurance application form that asks for a more in-depth medical history. The application process might seem arduous initially, but it will certainly pay off in the end.

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