Future Insurability

The guaranteed future insurability option is generally a built in feature that comes as standard with a number of life insurance products.

It allows for you to increase your level of cover without supplying additional medical information.

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How does the Guaranteed Future Insurability Benefit work?

Guaranteed Future Insurability allows you to increase your current level of cover, if you experience a personal event, without having to go through the medical application process again. This is applicable only once your policy is in force and will generally only be available once in every 12 month period.

What is a personal event?

A personal event may include:

  • Marriage
  • Divorce
  • Birth or adoption of a child
  • First mortgage on a home that is your principal residence
  • Increasing existing mortgage for purposes of building or renovating home

However this may differ between life insurance companies and it is important when you are discussing and comparing life insurance quotes with your adviser to find out what personal events are included in their future insurability benefit.

How much can I increase my cover by?

For Life, Trauma and TPD:

The amount you can increase your life, trauma or TPD cover by will depend on the insurer, however generally, the increase allowed may be the lesser of 25 per cent of the sum insured at the time the cover started, and $200,000.

For Income Protection:

For income protection insurance you will generally only be allowed to increase your monthly benefit by a certain amount. This may be by a percentage of your monthly benefit for example by 10% or 15% or there might be a maximum increase put in place by your insurer.

What is the time frame to take up this option?

You will generally be required to take up the option to increase your level of cover within 30 days of the significant life event occurring.

Proof of the significant life event occurring will also be required. This may be in the form of mortgage documents, marriage certificate or a birth certificate.

Who may need to use this option?

If you are newly married or are thinking about having kids, you may want to make sure this benefit is available so you can increase your cover in line with your circumstances. It is far easier to use this method than going through the full application process again.

There is no obligation to use this benefit and it can be used at your discretion.

How do I increase my cover normally?

When you apply for your policy, you will be required to provide your medical history. The insurer will then agree to cover you based on the answers provided in the application.

If you require the level of cover to be increased, you may need to go submit your medical history again.

If your medical history has changed, this may mean your premiums could be more expensive outside of the price increase due to the higher cover being applied for.

However by using this feature, you can avoid more expensive premiums or declined cover.

Published: May 18, 2015

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