What is guaranteed insurability option?

A guaranteed insurability option (GIO) may be included in your life insurance policy as an additional benefit.

It simply means that you’re able to increase the sum assured (pay out amount) of your policy, to suit a change in your circumstances.

Some reasons you may wish to increase your protection, using the guaranteed insurability option, include:

  • Your mortgage has changed
  • Your family has grown
  • Your marital/civil partnership status has changed
  • Your salary has increased

If you choose to use the guaranteed insurability option, then you can increase your cover without having to provide any further medical information.

Help protect your family and home from just 20p-a-day † with life insurance arranged through Reassured.

We’ve many years of experience helping people from all walks of life, secure the cover they need at an affordable price.

We can also tell you which insurers include the guaranteed insurability option as standard in their policies.

Take advantage of our fee-free broker service today to compare quotes and see if we can help you save money on your life insurance.

This provides a hassle-free alternative to taking out a new policy, which would require new underwriting (and may result in higher premiums).

Ultimately, it’s important to ensure that your family are suitably protected now and, in the future, (when life throws us some curveballs).

This makes the guaranteed insurability option a benefit worth looking out for when searching for life cover.

If you’re looking to arrange protection for your family today, get in touch with our award-winning team who’ll be happy to help.

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Guaranteed insurability option life insurance

Some life insurance policies include a guaranteed insurability option as standard, or simply, the option to increase your cover if your needs change.

Insurers may also call this benefit ‘guaranteed increase option’, ‘special events option’ or ‘life change benefit’.

Guaranteed insurability is one of several additional policy options (or benefits) offered by insurers, amongst premium waivers and indexation benefit.

These can all get a little confusing, (especially as additional policy options and the terms of these differ between insurers).

However, guaranteed insurability stands out somewhat because you can take advantage of this option at any point during the term of the policy (if you’re eligible).

Waiver of premium

Allows you to take a break from premium payments if you become incapacitated and unable to work due to an illness or injury.

Indexation benefit

Protects the value of your policy by increasing the sum assured each year in line with the Average Weekly Earnings measure or Retail Prices Index (RPI).

Whereas, other options (such as waiver of premium) must be chosen from the start of the policy, at an additional cost calculated into your monthly premium.

Continue reading as we explore the main features of the guaranteed insurability option for you in this article.

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Calculate how much life insurance you may need by filling in the costs you’d like your policy to cover.

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£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.

Source: Moneynerd.co.uk
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The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.

Source: Nimblefins.co.uk
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The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.

Source: Money.co.uk
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According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.

Source: SunLife.co.uk
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When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources: Daynurseries.co.uk, Primarytimes.co.uk & Savethestudent.org
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2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.

Source: Moneyage.co.uk
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If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.

Source: Scottishbusinessnews.net
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When you can use the guaranteed insurability option

The specific circumstances in which you can increase your life cover using the guaranteed insurability option will be outlined in your existing policy.

Generally, the insurer provides a list of certain life events or life changes that would qualify for an increase in your protection.

See the table below which displays the list of life-changing events, and which insurer offers which option:

AIG logo Legal & General Aviva LV= Royal London review logo Zurich logo Vitality logo
Adoption of a child Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick
Birth of a child Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick
Becoming a legal guardian of a child Icon ruby cross Icon green tick Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross
Marriage / Civil Partnership Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick
Divorce or dissolution of civil partnership Icon ruby cross Icon green tick Icon green tick Icon green tick Icon green tick
(whole of life cover only)		 Icon green tick Icon ruby cross
Increase in mortgage or loan Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick
Rental increase Icon ruby cross Icon green tick Icon ruby cross Icon green tick Icon green tick
(term life cover only)		 Icon green tick Icon ruby cross
Change of employer / promotion / salary increase Icon ruby cross Icon green tick Icon green tick Icon green tick Icon green tick Icon green tick Icon ruby cross
Loss of cover through change of employer Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross
Loss of cover due to retirement Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross Icon ruby cross
Increase in IHT liability Icon ruby cross Icon ruby cross Icon ruby cross Icon green tick Icon ruby cross Icon ruby cross Icon green tick


You’d need to provide appropriate evidence to the insurer of the life-changing event, within a specified time limit.

For example, with Zurich, you must apply for the guaranteed insurability option and provide the evidence they need, within 90 days of the life-changing event occurring.

Legal & General give you a much longer time limit, up to 6 months.

At Reassured, we can compare quotes from major life insurance providers to see if we can help you find your perfect policy.

Increasing your life insurance

Generally, it’s possible to increase your life cover on more than one occasion, up to the maximum increase as specified by the insurer.

The maximum amount you can increase by sometimes depends on the life-changing event.

For example, for a mortgage increase, some insurers won’t allow you to increase the new cover amount to more than the increase of the mortgage.

The table below shows the maximum age limit to use GIO and maximum increase for each insurer (for term-based cover).

Maximum age limitMaximum percentage increase of the original sum assuredMaximum monetary increase during the policyMaximum monetary increase per event
AIG logo 5450%£150,000£75,000
Legal & General 54100%£200,000N/A
Aviva 54100%£200,000N/A
LV= 5450%£200,000£150,000
Royal London review logo N/AN/AN/AN/A
Zurich logo 54Up to 100%Up to £200,000N/A
Vitality logo 5450%£150,000£150,000

Sources listed below

Essentially, the amount you can increase your cover by must be less than the maximum monetary amount.

For example, if the sum assured of your existing policy with Aviva is £600,000, then the maximum amount you can increase to is £800,000.

Or, if the sum assured of your existing policy with Aviva is £100,000, then the maximum amount you can increase to is £200,000.

Whole life policy with guaranteed insurability option

With a whole of life policy, you may need to increase your sum assured to meet an increase in inheritance tax (IHT) liability.

In this case, the maximum amount you can increase to is usually higher than for other life-changing events.

The table below shows the maximum age limit and maximum increase for each insurer for whole of life cover.

Also shown is the maximum age limit to use GIO and maximum increase for each insurer if the reason for the increase is due to an increase inheritance tax (IHT) liability.

Maximum age limitMaximum percentage increase of the original sum assuredMaximum monetary increase during the policyMaximum age limit (if increase is due to increase in IHT liability)Maximum percentage increase due to increase in IHT liabilityMaximum monetary increase due to increase in IHT liabilityMaximum monetary increase due to change in government IHT legislation
AIG logo 54100%£150,00089100%£250,000£5,000,000
Legal & General 54Up to 100%Up to £200,00069100%£200,000£200,000
Aviva 64100%£200,00069100%£200,000£1,000,000
LV= N/AN/AN/AN/AN/AN/AN/A
Royal London review logo 5450%£200,0006950%£200,000Equivalent to the increase in IHT liability
Zurich logo 54100%£200,00069100%Equivalent to the increase in IHT liabilityEquivalent to the increase in IHT liability
Vitality logo 5450%£150,0006950%£50,000Equivalent to the increase in IHT liability


If the increase in sum assured is due to the Government announcing a change in IHT legislation, then the maximum increase amount and the maximum age is significantly higher.

For example, AIG allows an increase of up to £5 million or 100% of the original sum assured or the increase in liability (whichever is the lesser of these).

How your new premium is calculated

When using the guaranteed insurability option, you won’t need to answer any further medical questions to secure the higher level of cover.

Your new premium is calculated based on:

  • Your age
  • The new cover amount
  • The length of the term

Although other factors, such as your smoking status, may also be considered.

Insurers alleviate some of the risk to them by implementing a maximum age limit, which tends to be 54 years.

Though on some occasions, for example with AIG whole of life cover, the age limit is 49 or 54, depending on what the life insurance was originally taken out to cover.

Some policy types allow you to use the guaranteed insurability option much later in life, depending on the life-changing event (and the insurer).

For example, a whole of life policy with Zurich allows you to increase the sum assured to cover inheritance tax liability up until the age of 69.

When guaranteed insurability is not an option

Not all policies include guaranteed insurability (or the option to increase your cover).

Usually, your existing policy must be accepted on standard terms (which means you pay a standard premium rate).

Some instances where the benefit is likely to be excluded or restricted may be:

  • You have another policy with the insurer that includes guaranteed insurability, and you’ve already increased the level of cover to the maximum, or below the maximum amount on this policy
  • You’ve been diagnosed with a terminal illness
  • You have a medical condition which was taken into account when taking out the existing policy (and you pay a higher premium due to this)
  • A waiver of premium or payment protection benefit is in place
  • Your age when taking out the policy was over than the maximum age limit
  • There are outstanding premium payments

Though it’s important to note that there may be other exclusions or restrictions not listed here.

Your eligibility for this benefit is determined by the insurer and your individual circumstances.

Guaranteed insurability option critical illness cover

The guaranteed insurability option may still apply to critical illness cover when it is either a separate policy or as part of your life cover.

To increase your life insurance with critical illness cover (as one policy), usually means that the increase would be applied equally to both the critical illness cover amount and the life cover amount.

To increase your critical illness protection as a separate policy, not all life-changing events will qualify.

Reasons you may be able to increase your critical illness cover alone, include:

  • Your mortgage has increased or you have a new mortgage
  • Your family has grown
  • Your marital/civil partnership status has changed

As mentioned, the terms of your guaranteed insurability option with critical illness (if available), will be outlined in your existing policy documents.

Joint life insurance with guaranteed insurability option

If you have a joint life insurance policy, then the guaranteed insurability option may still apply to you.

It’s just that both policyholders would need to meet the same criteria as described by the insurer for a single policyholder.

For example, the maximum age limit would apply to both policyholders at the time of the life-changing event.

Splitting a joint policy

In some cases, it’s possible to use the guaranteed insurability option to split a joint policy due to a separation, divorce or the end of a civil partnership.

The insurer would need to be made aware of this life-changing event within a specified time limit, with evidence, so that two separate policies can be arranged.

The new cover for each policy can be up to the original amount (100%) of the existing joint policy.

Though this depends on the insurer, and the type of policy, that offers this option.

Guaranteed insurability option rider

The term ‘guaranteed insurability option rider’ is used less frequently to describe this benefit, particularly in the UK.

A life insurance rider is just another way to describe an option or benefit that’s included in a policy.

Increasing life insurance (what’s the difference?)

There are several differences between increasing life insurance and guaranteed insurability.

First of all, increasing life insurance is a type of policy, whereas the guaranteed insurability option is an additional policy benefit.

When you opt for increasing life insurance, you agree that the sum assured (pay-out amount) will increase each year by a fixed amount during the term of the policy.

Premiums will also increase, usually on an annual basis, in line with the increased sum assured.

The purpose of increasing life insurance is to protect the policy’s value against the rate of inflation.

Whereas, the purpose of the guaranteed insurability option is to ensure that the sum assured of your policy is still meeting your needs following a life-changing event.

Compare life insurance quotes

Our award-winning life insurance broker service provides a fee-free service to help you find affordable life insurance suited to your family’s needs.

We can arrange policies that include the guaranteed insurability option for applicants eligible for this benefit.

The next step is to compare multiple quotes to secure the best possible deal we can offer from our panel of top UK insurers (life insurance starting from just 20p-a-day).

We can do this today, saving you time and money.

Get in touch with our dedicated UK team to get started.

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Sources:

Information taken from insurers websites is correct as of 05/05/2023

https://www.aiglife.co.uk/globalassets/aig/documents/1064_yourlifeplan_ta_cd.pdf/download

https://www.legalandgeneral.com/landg-assets/adviser/files/protection/adviser-guide/w12549.pdf

https://www.aviva.co.uk/adviser/documents/view/al50001c.pdf

https://static.aviva.io/content/dam/document-library/adviser/individualprotection/al50008c.pdf

https://www.lvadviser.com/service/documentlibrary/get/4f802f4733cd45a7af9c9e6019db7ecd/life-protection-policy-conditions

https://www.royallondon.com/siteassets/site-docs/insurance/life-insurance/rl-direct-terms-and-conditions.pdf

https://media.drewberry.co.uk/vitality-income-protection-terms.pdf

https://adviser.royallondon.com/globalassets/docs/protection/PCP8P10001.plan-details-for-the-pegasus-whole-of-life-plan.pdf

https://www.zurichintermediary.co.uk/personal-protection

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