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Whether you’re single or providing for your family, you might be wondering if you can increase your life insurance cover without dealing with health questions.
Especially if you’ve been diagnosed with a serious illness that could prevent you from getting a new life insurance policy, you might worry about how to increase your cover if needed.
Thankfully, there’s hope. If your existing policy includes a Guaranteed Insurability Option (GIO), you can increase your cover without undergoing additional medical underwriting. However, certain criteria apply.
What is Guaranteed Insurability Option (GIO)?
The Guaranteed Insurability Option is a benefit in life insurance policies that allows policyholders to increase their life cover without undergoing further medical underwriting.
This means you can increase your cover even if your health has worsened since you first got the policy.
Not all insurance providers offer this benefit, so it’s crucial to review your policy carefully to determine if it’s included. Taking the time to check your cover details can help you avoid unexpected gaps and ensure you’re fully protected.
This option is available under specific life events, providing flexibility and peace of mind as your life circumstances change.
When Can I Increase My Life Insurance Cover?
Increase in Your Mortgage
If you increase your mortgage, whether to purchase a new home or to fund home improvements, it makes sense to increase your life insurance cover as well. This ensures that your loved ones are not burdened with mortgage repayments in the event of your untimely death.
The Guaranteed Insurability Option allows you to increase your life cover in line with your mortgage increase without needing further medical evidence.
The maximum increase allowed is generally capped at the lower of €100,000 or 50% of the original cover amount, helping to ensure your policy stays aligned with your new financial obligations. However, this limit can vary depending on the provider.
Marriage
Marriage brings about significant financial interdependence. As a couple, you might have shared financial responsibilities, including debts and future financial plans like buying a home or raising children.
Increasing your life insurance cover ensures that your spouse is financially protected in the event of your death.
Upon marriage, the GIO enables you to increase your life cover without additional medical checks, providing security as you enter this new chapter of your life.
Additionally, learn more by reading our article about life insurance for families.
Birth or Adoption of a Child
The arrival of a child marks a substantial change in your financial priorities. From daily expenses to future education costs, ensuring your child’s well-being becomes a top priority.
Increasing your life insurance cover at this stage can help secure your child’s future, even if something happens to you.
The GIO allows you to increase your life cover when you welcome a new child into your family, again without needing medical underwriting. This ensures that your growing family’s needs are met, no matter what life throws at you.
Job change or promotion
As your income increases, your financial responsibilities and lifestyle may also change. With this option, you can boost your life insurance cover by up to 20% of the original amount every three years, ensuring that your cover keeps pace with your growing income.
The best part is that you can do this without needing to provide any additional health evidence, making it a hassle-free way to adapt your policy to your evolving needs.
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Key Considerations About the Guaranteed Insurability Option
Policy Limits: The total increase allowed over the policy term is capped, typically at the lower of €200,000 or the original level of cover. This means you should carefully plan when to use the GIO to ensure you maximise its benefits.
Age Restrictions: The GIO usually ends when you or the older person in a joint life policy reaches age 55. Therefore, it is crucial to consider your life insurance needs earlier rather than later.
Premium Adjustments: While the GIO allows for increases in cover without medical checks, your premium will be adjusted accordingly to reflect the higher level of cover.
Case Study: Life Insurance Increase Despite a Chronic Illness
Background:
James, a 42-year-old software engineer in Carlow, initially took out a life insurance policy in 2016 to cover his mortgage. James and his partner recently had a child, prompting them to move to a larger home, which required a bigger mortgage. James sought to increase his life insurance cover to ensure the new mortgage was covered.
The Challenge:
James had recently been diagnosed with a chronic illness, making it unlikely he would pass the medical underwriting required for increasing his insurance cover.
The Solution:
Fortunately, James had included a Guaranteed Insurability Option (GIO) in his original policy. This option allowed him to increase his cover without undergoing medical underwriting as long as the increase was due to a qualifying life event, such as taking on a new mortgage.
Outcome:
James successfully increased his life insurance cover to match his new mortgage without facing the hurdles of medical underwriting, thanks to the GIO. This ensured financial security for his family, despite his health condition.
This case underscores the importance of including features like GIO in life insurance policies, providing crucial flexibility and protection when life circumstances change.
Do All Insurers Offer Guaranteed Insurability Option?
Not all insurers offer the Guaranteed Insurability Option, and even among those that do, the terms can vary significantly.
Some insurers provide it across multiple products, including life insurance, mortgage protection, and income protection, while others may limit it to specific policies.
The maximum increase allowed, age limits, and other conditions can also differ, so it’s essential to compare policies carefully.
Can I increase my life insurance cover outside the guaranteed insurability events?
If you want to increase your life insurance cover beyond the specified events listed in your guaranteed insurability option, you will generally need new underwriting or even a new policy.
The only exception might be if you recently took out the policy and are requesting a small increase. In that case, you may only need to answer a few health questions covering the time since you first purchased the policy, but approval is still at the insurance provider’s discretion.
Is there another way to increase my life insurance cover?
Consider adding an Indexation option to your policy. Indexation allows your life insurance cover to automatically increase each year, typically in line with inflation, without requiring new medical underwriting.
This feature helps maintain the value of your policy, providing adequate protection for your loved ones as the cost of living rises. By adjusting your cover to keep pace with inflation, you can ensure that your beneficiaries receive enough financial support when needed without the risk of your policy’s value diminishing over time.
By reading our article, you can learn more about the indexation option and how inflation can impact your life insurance payout.
Get a Life insurance Quote with LowQuotes
We at LowQuotes do the hard work for you by shopping around for the best prices from the best life insurance providers in Ireland.
Our goal isn’t just to find you the cheapest option but also to provide personalised advice to ensure you choose the provider that best suits your unique needs.
Whether you’re looking for comprehensive coverage or the most affordable plan, our expert team is here to help you confidently make an informed decision.
We also provide various financial services, such as mortgages, serious illness cover, pensions, financial planning, health insurance, and savings & investments.
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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.
