What Is A Guaranteed Life Insurance Policy?

Jane Wardle

Written by Jane Wardle on February 11, 2019

Updated February 11, 2019


Choosing a life insurance policy is likely to be one of the most significant financial decisions you make during your lifetime and can have a huge impact on your family after you’re gone.

It is never an easy topic to think about but getting your life insurance in place and choosing the right plan can protect your family in the event of your death and leave them in a financially stable situation. On the other hand, if you choose the wrong type of life insurance for you, or do not get any at all, then you could leave your loved ones struggling with debts after you’re gone.

Understanding all the various options available for life insurance can be overwhelming, and it is important to look at various types in order to choose the one that is right for you and your family. Guaranteed life insurance is a popular type of cover, and this guide covers everything you need to know about guaranteed life insurance including what it is, who is eligible for it, and how much it costs.

What is guaranteed life insurance?

Guaranteed life insurance is sometimes referred to as Guaranteed acceptance life insurance, and it is a life insurance policy that doesn’t require any medical reviews to be approved. Like with all life insurance policies, guaranteed life insurance will pay out a lump sum of cash to your beneficiaries in the event of your death.

The main difference with a guaranteed life insurance policy compared to other options is that anyone can take out cover as long as they can pay the premiums. They are openly available to anybody, with no requirements for medical underwriting, which means they are a popular choice for individuals with health issues.

Guaranteed life insurance generally offers much lower payouts than other types of life insurance that require a medical examination. The reason behind this is that they are more likely to be taken out by those who are older or in poor health, and so insurance companies will offer lower payouts in order to protect themselves.

Who is eligible for guaranteed life insurance?

Whilst guaranteed life insurance is often advertised that anyone will be accepted, and the only requirement is to pay the monthly premiums, this is often not the case. There are some cases where guaranteed life insurance will be turned down, such as applicants that have been diagnosed with a terminal illness, or those receiving long-term care.

Some guaranteed life insurance providers may also put age restrictions on their policies, so you might only be eligible if you are between 18 and 65 years old.

Many guaranteed life insurance policies will not cover you for pre-existing medical conditions that you are aware of when you take out the cover. This doesn’t mean you cannot receive any cover if you have a pre-existing condition, but that if your death is caused by this known condition then they will not pay out. You will however be covered for any new unrelated conditions or accidental death.

Be sure to carefully read all the terms and conditions of a guaranteed life insurance policy before you agree to anything, and have a thorough understanding of exactly what is covered and what isn’t.

How much does guaranteed life insurance cost?

Many people often make the assumption that as the payout from a guaranteed life insurance policy is usually lower than with other policies, then the monthly premiums will be lower as well. However, this is usually not the case as the premiums for guaranteed life insurance are often high compared with other life insurance options.

It is not uncommon for the amount paid in premiums over time to add up to more than is paid out in death benefits, which is a huge drawback that many are wary of. A lot of guaranteed life insurance policy providers will offer fixed premiums for the first few years of the policy, and then increase them over time.

Insurance companies will assume that the people who are taking out guaranteed life insurance policies are unwell or elderly, and therefore more likely to pass away and result in a payout. This is the reason why the premiums are high, and why people with high mortality risks will not be eligible.

Guaranteed life insurance policies will come with a contestable period, which is usually two years. This means if the policyholder passes away within the first two years of taking out life insurance, then the insurer might not pay out the lump sum.

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