Find out if guaranteed life insurance, also known as over…
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:
If you choose to use the guaranteed insurability option, then you can increase your cover without having to provide any further medical information.
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We can also tell you which insurers include the guaranteed insurability option as standard in their policies.
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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.
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.
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.
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:
|Adoption of a child|
|Birth of a child|
|Becoming a legal guardian of a child|
|Marriage / Civil Partnership|
|Divorce or dissolution of civil partnership||
(whole of life cover only)
|Increase in mortgage or loan|
(term life cover only)
|Change of employer / promotion / salary increase|
|Loss of cover through change of employer|
|Loss of cover due to retirement|
|Increase in IHT liability|
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.
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 limit||Maximum percentage increase of the original sum assured||Maximum monetary increase during the policy||Maximum monetary increase per event|
|54||Up to 100%||Up to £200,000||N/A|
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.
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 limit||Maximum percentage increase of the original sum assured||Maximum monetary increase during the policy||Maximum age limit (if increase is due to increase in IHT liability)||Maximum percentage increase due to increase in IHT liability||Maximum monetary increase due to increase in IHT liability||Maximum monetary increase due to change in government IHT legislation|
|54||Up to 100%||Up to £200,000||69||100%||£200,000||£200,000|
|54||50%||£200,000||69||50%||£200,000||Equivalent to the increase in IHT liability|
|54||100%||£200,000||69||100%||Equivalent to the increase in IHT liability||Equivalent to the increase in IHT liability|
|54||50%||£150,000||69||50%||£50,000||Equivalent 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).
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:
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.
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:
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.
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:
As mentioned, the terms of your guaranteed insurability option with critical illness (if available), will be outlined in your existing policy documents.
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.
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.
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.
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.
Information taken from insurers websites is correct as of 05/05/2023
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