Should I review my life insurance?
A common thing for a life insurance policy is that there will be a term that will usually be between 20 and 30 years. Some life insurance policies can be for as little as 1 year and as much as 50 years, or even whole of life.
Many people believe that you can’t change your life insurance or that you’ll somehow lose out if you change your policy. This isn’t always true and you are essentially free to move and change your life cover whenever you want to without penalties.
You might also be able to adjust or change your existing life insurance policy with your existing provider. In this guide, our aim is to answer some of the most frequently asked questions people have when it comes to reviewing their life insurance cover.
SUMMARY: there are many reasons for reviewing your life insurance policies to make sure that they are still appropriate for your current circumstances. You will usually have a number of options available to you if you need to update your cover.
Can I change my existing life insurance policy?
There are many reasons why you might want to change or update your existing life insurance policy.
If you have a change in circumstances and you need to make changes to your life cover, your first port of call should be your existing insurer. Usually the quickest and easiest option for changing something on your life insurance is to speak to your current provider.
Most insurers offer Guaranteed Insurability which allows you to make several changes to your existing plan without the need for further medical underwriting.
Possible changes you can make to an existing life insurance policy:
- Amount of cover
- Term of your policy
- Bank details
- Home or business address
- Beneficiaries (policies in trust)
Most insurers will offer the options to change and update your cover within reason, as long as your health has remained the same. If your health or lifestyle has significantly changed, then you might need to look at other options.
Note: Things happen in life and your life insurance needs will change over time, so you should regularly review your existing life cover.
Can I cancel my life insurance?
Life insurance is a monthly renewable insurance contract that has no penalty for cancellation.
There are very few instances where there would be any financial penalty for cancelling an existing life insurance policy. None of the well-known life insurance providers charge a cancellation fee with life cover.
It is however possible that an insurance broker or adviser, might charge you an ‘administration fee’. This can be to help them to cover any costs that they may have incurred for providing you with life insurance.
With most insurers, you can usually cancel your policy within 30 days of policy start and be refunded the premium you have paid.
Note: This type of fee or charge is becoming less and less common, but there are still companies that do request this.
How to switch life insurance policies and providers
You are well within your rights to review your life insurance policies whenever you want to and to move them as many times as you like.
You may want to decrease or increase the amount of cover, change to an insurer with more benefits in their policies (accidental death benefit for example) or maybe even take out joint life insurance if you have recently married.
The best ways to switch you life insurance policy to another insurance provider is to speak to a life insurance expert. A protection specialist will be able to tell you which insurers are best and cheapest for you current or new circumstances.
5 steps to switching your life insurance:
- Review your existing life cover – get hold of your documents or login to your online portal to figure out what your existing policy covers
- Any changes in circumstances – make sure that you’ve got everything you need for your life insurance review (e.g. mortgage details, debts, dependents etc.)
- Changes in health and lifestyle – has your health either deteriorated or improved since you took out your existing plan?
- Speak to a life insurance expert – get advice from a life insurance specialist who can look at your existing policies and then review against any changes in circumstances etc.
- Cancel your cover (if applicable) – you have the option of either cancelling your direct debit with your bank or you can cancel your policy direct with your insurer
When should I review my life insurance?
Life insurance is specifically designed to protect your family and your mortgage, or some policies are used for business purposes. It will pay out a cash lump sum to help support your loved sum if you were to die (or become terminally ill, if you have terminal illness benefit).
Most people don’t think to review their life insurance, but there are some points in life where you absolutely should check your cover. Your life changes and your needs will be very different over time, so that’s an ideal time to check your life insurance is up to date.
Some of the key points to review your life insurance:
- New child (e.g. birth, adoption, fostering etc.)
- Children no longer dependent (e.g. leaving home)
- Changing mortgage (e.g. remortgage, new home, selling a property etc.)
- New job
- Starting a business or selling a business
Advantages of reviewing your life insurance
When thinking of updating or cancelling your life insurance cover there are definite pros and cons that you will need to consider.
There are many reasons why you should review your life cover and potential benefits to updating your cover.
- Matches your current needs and circumstances
- Can reduce your life insurance coverage and your insurance premiums
- Benefit from lower life insurance premiums
- Changes in lifestyle can help to reduce premiums (e.g. stopping smoking)
- Improvements to your health can reduce premiums
- Better cover might be affordable now
Disadvantages of reviewing your life insurance
Here are some of the main reasons that you might lose out when reviewing your life insurance.
- Premiums are generally higher as you get older
- Health might deteriorate so costs will go up
- Certain policies might not be available
- Premiums paid might be lost (e.g. whole of life or over 50s life insurance)
- You might no longer be able to afford the cover that you need
How to review your life insurance
The very best way to review your life insurance and make sure that you get what you need at the right price, is to speak to a life insurance specialist. They can be a big help in comparing life insurance policies and can even assist you in switching life insurance companies if this means a better deal for you.
You can also speak to your existing provider to see what options are available to you with them. If you have the option to update your existing plan then you might find it quicker, easier and cheaper, to do that.
Be careful when cancelling any existing cover and make sure that your replacement policy is in force.