As much as we'd all love to, we can't stay 18 forever (maybe in spirit perhaps!), life speeds up and so do our responsibilities. Whether you have a partner or children (or both), you might reach the stage of buying life insurance.
With most types of life insurance, you'll find that as you get older, the higher your insurance premiums can become. The good news is that if you're aged 50 or over a Guaranteed life insurance policy can ensure you have something to leave your loved one’s once you're gone...
This article covers any queries you may have such as:
What is guaranteed life insurance?
How does guaranteed life insurance work?
What does guaranteed life insurance cover?
Who needs guaranteed life insurance?
What are the pros and cons of guaranteed life insurance?
Putting a guaranteed life insurance policy in trust?
What is guaranteed life insurance?
Guaranteed life insurance (also known as ‘guaranteed life acceptance’) works similarly to a standard whole of life insurance policy. The big difference is that it’s designed for people who may struggle to get accepted for life insurance cover. This can be because of a person's age or health.
As you get older, getting life insurance can become much more difficult, with companies assessing factors like your age, health and occupation.
With guaranteed life insurance - as the name suggests, you’re guaranteed acceptance for a life insurance policy regardless of your health or occupation.
When applying for fully medically underwritten Life Insurance, companies may require you to undergo a medical exam and will ask you some basic health and lifestyle questions - with guaranteed life insurance, this isn't the case.
It is available for those who may struggle to get a medically underwritten life insurance policy or pay high costs for medically underwritten life insurance.
How does guaranteed life insurance work?
Just like any life insurance policy, guaranteed life insurance pays out a lump sum to your loved ones when you die. You have to keep paying your monthly premiums to stay covered, otherwise, the policy won't pay out on your death.
Though the payout is guaranteed, there are drawbacks to this type of policy. Some insurers may not pay out the full amount if you die within the first 12 months of taking out the policy. In other cases, they may only repay the premiums paid so far.
Most guaranteed life insurance policies are available for those who are:
Aged 50 & over - the age cap (the maximum age over 50 that you can be and still take out a policy) varies from provider to provider. If you’re a smoker, the age cap may be reduced.
- A permanent resident of the UK - excluding the Channel Islands and the Isle of Man.
What Guaranteed Life Insurance covers
When taking out a guaranteed life insurance policy you can expect cover for certain such as:
Immediate cover once you apply.
Guaranteed payment for your beneficiaries on your death, as long as you’ve had the policy for at least the qualifying period (usually 24 months). Some policies will even refund any premiums you've paid if you pass away during the waiting period!
Accidental death - although accidental death cover is available immediately on Over 50s life insurance, these policies will only pay out on other types of death once the insurers' waiting period is over (please see your selected insurance policy summary document for full details).
Non-accidental death - Cash lump sum paid on your death once you’ve passed the qualifying period. Should you die before the qualifying period due to a non-accident, your premiums paid so far are typically paid out to your beneficiaries.
Ultimately, the range of cover depends on the provider's plan. Many providers have different terms so it's always best to compare your options. You might find that some providers cap the maximum age of cover if you are a smoker.
In some cases, answering additional health questions can result in qualifying if you qualify for a discounted premium/increased sum assured.
Do I need guaranteed life insurance?
There are several reasons why you may choose guaranteed life insurance, including if:
You have dependants such as children or a partner who rely on you financially.
Require support towards mortgage repayments if it is yet to be paid off.
You wish to assist your family with funeral costs should you pass away.
You have any pre-existing medical conditions which make medically underwritten life insurance cost prohibitive or not possible to secure.
You have high risk hobbies or an occupation which makes medically underwritten life insurance cost prohibitive or not possible to secure.
You are looking to secure cover quickly, without the need to complete lengthy medical forms or fulfil requirements for GP reports or medical screenings when applying for your policy.
If any of these apply to you, there is a chance that you’ll struggle to be accepted for astandard life insurance policy, which is why you may turn to guaranteed life insurance.
What are the pros & cons of guaranteed life insurance?
It doesn't matter what you are buying, it's always best to factor in the pros and cons of a product or service before you commit to it. You may already have some doubts about guaranteed life insurance, so sorting out the positives and negatives helps for a fresh perspective.
Pros | Cons |
---|---|
|
|
Is Guaranteed Life Insurance tax-free?
Luckily, along with the other types of life insurance, a guaranteed life insurance payout is tax-free. Despite this, it is factored into inheritance tax liabilities. This means that if the value of your estate is over the inheritance tax threshold, your beneficiary may be taxed when they receive your payout.
Writing a guaranteed life insurance policy in trust
Thankfully, you will be able to write your guaranteed life insurance policy in trust. This is mainly to prevent it from being taxed when it eventually pays out. In some cases, a life insurance policy can be considered part of your estate and liable for inheritance tax.
In reality, you only need to consider this if the total value of your estate is likely to go over the inheritance tax cap. An important thing to note, if you write a life insurance policy into trust, it cannot be undone. Once you proceed, you won't be able to withdraw it later down the line.
For more information, check out our insightful guide on writing your policy in trust.
Struggling to find the right policy? We're happy to help.
Whether you're struggling to find the right policy for you and your family or have any queries about types of policies - we're always happy to help. Our specialists are always on hand to guide you through the process, finding the best policy whatever your circumstances are.
At Cavendish Online we are dedicated to helping you find the best and most affordable option that suits you. We won’t just limit your search to one company either, as our team of advisers work on a whole of market basis.
Rather than paying a one-off fee, if you choose to take a policy through our advised service Cavendish Online will receive some commission for the work that they do (though we sacrifice a large proportion of this to bring costs down for you!).Speak to an adviser today to get started!
Speak to the experts...
Give our advisers a call today.
Our team of friendly and professional advisers are on hand to help with any questions you may have regarding Life Insurance.
The advisers can also make recommendations tailored to your current situation and will research the market on your behalf, ensuring you secure the cover you need and supporting you every step of the way.
01392 43 61 93(Monday to Friday, 9am - 5.30pm)
Request a callback