Guaranteed Renewable vs Cancellable Life Insurance Contracts

If you’re planning your finances and investigating life insurance options, it’s worth checking your life insurance policy wording to ensure you know exactly which type of contract you’re getting yourself into. If you’re wondering what the difference is between ‘guaranteed renewable’ and ‘cancellable’ life insurance policies, then read on!

 

What is Guaranteed Renewable Life Insurance?

Guaranteed renewable means that once you’ve started a life insurance policy and have been officially accepted and received your policy document, the life insurance company cannot in any way shape or form cancel your coverage providing you pay all the future premiums when they fall due, and if you’ve been honest in your dealings with the life insurer and disclosed everything required by law.

On the other hand, cancellable contracts don’t necessarily automatically renew each year. The life insurance company has the right to refuse to renew your cover.

Some hazardous occupations, for example a hi-rise window cleaner may only be able to obtain a cancellable contract in view of the risks involved in their day to day duties compared to someone sitting at a desk all day.

In the situation where you’ve reached middle age and started to get the old ‘middle age spread’ happening and discovered all those midnight snacks have attributed to being diagnosed with diabetes, you might thank your lucky stars you bought a guaranteed renewable contract when you were young and healthy.

Good financial planning can mean the difference between a good quality of life and a relatively poor one if the time comes to make a claim on your life insurance policy.

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