Yes, you can change insurers by cancelling your current insurance policy for a new cover that suits your needs or you may have the option of amending your life insurance with your current provider. It’s a good idea to regularly review your cover to make sure that it is right for you and your family. It may be that there have been some significant changes to your personal circumstances; a new addition to your family, your mortgage has changed or simply that you have found a better deal. Your life insurance policy should change as well to ensure your family is fully protected if the worst happens to you or your partner.
We often shop around for car and home insurance to find a better deal so why not do the same for your life insurance. In this article I am going to highlight a few reasons why you may want to review your cover and a few important things to consider.
Reasons why you may want to change your life insurance policy.
Changes to your mortgage situation.
It is common for people to take out a life insurance policy to cover a mortgage so that in the event of your death, a lump sum is paid out to help cover your remaining loan.
Over time the circumstances surrounding your mortgage may have changed, perhaps you have moved to a larger property, re-mortgaged your property to release equity or your payments have changed. You may also find that your policy was only designed to run for a certain number of years, (in line with the original mortgage term) and it may end before your loan is paid off. Either way, when your insurance policy is no longer in line with your personal and financial circumstances, it’s time to change your policy.
Changes in your family.
Life insurance is primarily in place to protect your family should the worst happen. If your family grows in size then your current policy may not be sufficient anymore, so it is important to review your life cover as your family grows. It may be that you took out a policy purely to cover the mortgage, if you are expecting your first child or have children then you may want to consider increasing or amending your cover to ensure there is an additional lump sum for your family, on top of your mortgage loan. Take into consideration the after effects for your partner/family in the event of your death, this amendment to your cover could be crucial to help with debts, essential bills, and care for any young children. Read my article on ‘How Much Does It Really Cost to Raise A Child’ to help understand the costs that may need to be considered.
You have researched and there is a better policy type for you.
There are a number of different types of life policies, such as whole of life, and term insurance. Your current policy may only have a 20-year term but with young children you may feel you need to extend this term to help pay for their college education should something happen before they become independent. Or if you want the insurance to repay a debt that will be paid off in a specified time period, consider a term policy for that period. You may decide you need life insurance for as long as you live; a whole of life policy pays a death benefit whether you die tomorrow or live to be over 100. There may be other policy types that suits your needs. Critical Illness cover and Income Protection cover are also policies that should be considered when there are changes in your personal circumstances.
You’ve just got married or divorced.
Getting married is a major life-changing event. The financial responsibility for a spouse is part of the commitment you make. If you already have policies, you may need to update the beneficiary information. If you don’t have any form of life insurance at this point, you should consider it as the younger you are the cheaper the premiums. Divorce is also a time to reconsider your life insurance needs. You may want to ensure protection is in place if your ex-spouse dies and he (or she) is the major provider for you and the children. Also, if you keep your policy in force after a divorce, you may want to re-consider your ex-spouse as a beneficiary.
Changes to your financial position.
Your life insurance policy may help replace your income if you pass away, it is common for your salary to change throughout your career, and your family’s lifestyle may change along with it. You might want to consider updating your life insurance coverage to keep up with your current income, as this could help your loved ones maintain their current lifestyle. Consider adjusting your policy when your salary changes, you start or sell a business, or you change jobs.
Important things to consider when changing your life insurance policy.
While there may be some major reasons to change your life cover or maybe you are tempted by the prices advertised all over the internet, there are some key points you should consider before changing your policy or your provider.
Age and Health
Keep in mind that premiums are lowest when you are young and increase upon renewal as you age. Some term insurance policies can be renewed when the policy ends, but the premium may increase. Your health is also an important factor, if you’ve had any health problems since taking out your policy, this may increase your premiums. You may have to take a medical examination for your new policy so ensure you get quotes before making any decisions.
Compare, review, and understand the policies
See if you’re getting the same or a higher death benefit – the amount that’s paid out to your loved ones. Consider the policy’s cost compared to its coverage to make sure it’s worth it. Be sure to compare your rights and benefits under your new policy against the old one; they may not be the same.
Consider adding to your policy first.
You can save time and money by amending or adding to your current policy instead of replacing it.
Check the waiting period.
Often, there can be waiting period, generally a year or two, before you can make a claim on your new policy. Make sure you check your new policy for any waiting period.
Look out for scams.
Always try to seek a second opinion and be aware of the warning signs of someone trying to convince you to change policies. Make sure you are not getting taken advantage of or scammed.
If you have concerns about replacing a policy please get in touch, it is always worth getting a second opinion and discussing all your options. It is important to make sure you review all the advice you get before replacing your policy.