Non-Cancellable versus Guaranteed Renewable Life Insurance

Modern day Australian Life Insurance products have a number of features and add-ons to entice purchasers. Two particular features common throughout policies in Australia include 'non-cancellable life insurance' and 'guaranteed renewable life insurance'.

Non-Cancellable life insurance

As the name denotes, non-cancellable means a policy cannot be cancelled and the premiums cannot be increased for the life of the policy provided you continue to pay your premiums when they are due. If you do not pay your premiums then this type of policy can be cancelled and you will no longer be protected.

Guaranteed renewable life insurance

On the other hand, guaranteed renewable life insurance means a policy cannot be cancelled as long as you pay your premiums; however the premiums can be increased over the life of the policy, usually due to age increases rather than newly acquired medical conditions.

Since the policy cannot be cancelled you only have to apply for cover once. You do not have to provide any further updates on the change of your health.

Most policies offered by insurers in Australia are 'guaranteed renewable'.

Which is better, guaranteed renewable life insurance or cancellable life insurance?

Guaranteed renewable policies are generally the best type of policy to go for as it offers peace of mind in knowing that should you need cover for longer than you expect, the insurer cannot cancel your policy or make you reapply. The only time you should consider a 'cancellable' or 'select term' policy is when under specific circumstances it may be the most appropriate type of life cover for you.

Get advice on life insurance Australia wide

With the many features of different life insurance policies it pays to speak to an xLife adviser. Get advice on life insurance Australia wide and discuss the pro's and con's of features like guaranteed renewable with an xLife adviser.

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May 2010