Tips for buying flexible UK life cover October 25, 2009
Posted by admin in : Buying Life Cover , trackbackMost people’s life insurance needs change over time—when they take out a mortgage, get married, have children, pay off the mortgage—their insurance needs increase or decrease accordingly.
One of the most important aspects of buying life insurance, therefore, is the flexibility of your policy. Choosing UK life cover that includes Guaranteed Insurability Options (GIOs) is an excellent way of achieving this flexibility, and keeping your future potential insurance costs as low as possible.
What are Guaranteed Insurability Options?
GIOs are written into some, but not all, term life policies and allow the policy owner to increase their cover at some point in the future if needed. The crucial point is that they are able to increase their cover without the need for additional underwriting.
This is important because it’s the process of underwriting that determines your premiums. Underwriting is the way an insurer quantifies the level of risk that insuring a given individual represents to the company. All of the questions and information that insurers ask for when you apply for a policy are used to determine the likelihood that you’ll make a claim on the policy while it’s in effect. If the company determines you are unlikely to make a claim, you’ll benefit from lower premiums.
Why are GIOs better than getting a new policy?
Choosing a policy with GIOs can save you money on your life cover premiums in the future simply because GIOs allow you to purchase additional insurance without having to go through the underwriting process all over again. This is particularly useful if your health has deteriorated since you originally bought the policy and you then need additional cover.
Often several years will elapse between the time you purchase a policy and the time you decide you need additional cover, and one of the main factors that insurers consider during the underwriting process is the health status and age of the individual.
When do GIOs apply?
Not all insurance companies offer GIOs on their policies, and those that do may give varying options. Some GIO life events include:
- A marriage or civil partnership
- The birth or adoption of a child
- Changes in career or salary
- Obtaining or increasing your mortgage
- Separation of a joint policy—in this case the joint policy can be separated into two policies if you are separated or divorced. Both parties keep the same level of insurance protection as they had on the original policy.
Remember that not all companies will offer all the GIOs listed—if you’re interested in the additional protection that GIOs provide it’s particularly important to shop around to find the options that most benefit you.
GIOs can be exercised if you’re under 55 and your original policy was underwritten at standard rates (meaning that at the time you were considered of average or lower risk).
Similar Posts:
- What options to look for in your Term Life Insurance quote
- A quick tip for a faster UK life cover application
- How to control the cost of your life cover quote
- Choosing mortgage life cover to protect your home
- What if you can’t afford to buy life insurance with critical illness protection included?
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