Changing Your Life Insurance Policy

Once you've taken out a life insurance policy, it is important to go over and review your cover fairly regularly to make sure it is always up to date with your personal situation.

Your financial position might change; your family might change in some way; there are any number of things that could change in your life that would have a bearing on the kind and level of cover you need from your life insurance policy.

In This Guide:

• Overview of Life Insurance policies
• Personal circumstances - family changes
• Personal circumstances - mortgages and debt
• Personal circumstances - Changes in your health
• How to change your life insurance policy
• Changing life insurance provider
• Could you benefit from a joint life insurance?

Overview of Life Insurance policies

1. Review Your Current Policy

Before making any changes, review your existing life insurance policy. Check:

• The amount of cover (sum insured)
• The type of policy (term life, whole of life, etc.)
• Any exclusions or conditions
• The cost of premiums

2. Reasons to Change life insurance providers 

Common reasons for changing life insurance include:

• Marriage or divorce
• Having children
• Buying a house
• Significant changes in income
• Health changes
• Finding a more affordable or comprehensive policy 

3. Options for Changing life insurance

You have a few options when changing life insurance policy:

• Amend your existing policy: Some insurers allow you to update your policy if your circumstances change. This could mean increasing or decreasing your cover or adding extra benefits.
• Switch to a new policy: You might find it better value to cancel your existing policy and take out a new one. Be aware, though, that cancelling a policy too early could leave you uninsured or lead to higher premiums, especially if your health has changed.
• Take out additional cover: Instead of replacing your old policy, you could simply take out a second policy to top up your existing cover.

4. Things to Watch Out For when changing life insurance 

• New medical checks: A new policy may require fresh medical underwriting, and if your health has worsened, premiums could be higher. Make sure to review any medical information regarding your current state of health. 
• Loss of benefits: Some older policies have features that newer ones don’t offer, like guaranteed premiums. Make sure to ask your insurance provider about this. 
• Policy overlap: Make sure you don’t cancel your old policy until your new one is fully in place to avoid a gap in cover. This is especially important when you switch life insurance companies. 

First we’ll look at a few common reasons why people might want to change their life insurance policy, and then we’ll go through the changing process itself.

Personal circumstances - family changes

Given that your life insurance policy will pay out a certain amount to your family or other dependents in the event of your death, if your familial situation changes, say you have another child for example, then the nature of your policy should change with it.

If your family grows in size, then the initial amount set out might not be sufficient any more, and so you can amend your policy, increasing the final pay out to accommodate for this.

Say you have no children when you take out the life insurance policy, having taken it out purely to pay off the remainder of your mortgage or other household debts. If you then have a child, you might want to consider increasing and/or altering the pay out so that it includes a regular annual income delivered to your child.

Personal circumstances - mortgages and debt

One of the most common reasons for taking out a life insurance policy is so that in the event of your death, a lump sum is paid out that helps to cover any remaining payments left on your mortgage or other debt.

The circumstances surrounding your debt may well change, for better or for worse. Perhaps you’ve moved to a larger house, increasing the amount you have to pay back or, conversely, you could’ve come into a large amount of money, say through inheritance, and might not need as big a pay-out as you initially signed up for.

Either way, when the terms of your insurance policy are no longer in line with your personal and financial circumstances, it’s time to change your policy.

Now let’s take a look at how you’d go about doing just that.

Personal circumstances - Changes in your health

If you experience a significant change in your health or develop a critical illness, it is important to review and potentially update your life insurance policy or change life insurance completely.  

Your current cover may no longer reflect your needs, and updating it ensures that you and your loved ones remain properly protected.

A change in health could also affect the terms of your policy, including premiums and eligibility for certain benefits. 

By informing your insurer and making any necessary adjustments, you can avoid complications later on and ensure that your policy continues to provide the right level of support. 

Remember, taking action early offers peace of mind and helps you plan more effectively for the future.

How to change your life insurance policy

So you’ve decided to change life insurance for whatever reason, your current level of cover is no longer appropriate considering your situation. You now have three options available:

1. Change the scope of cover on your current policy

2. Change to a different provider

3. Cancel your policy altogether

Some, but not all, life insurance providers will allow you to increase or decrease the level of cover you receive from your current policy. Your premiums will be adjusted accordingly and in some cases you may need to undergo new health checks in order to make sure the policy is fully up to date, though this is not always the case.

For those with an insurer who will not allow alterations to the level of cover already being experienced, you’ll want to look into other insurance providers in order to get what you need. If this is the case you should make sure you shop around, using a comparison service like ours to get a life insurance quote from multiple providers, in order to guarantee you’re getting the most for your money.

In some cases, it is actually better to keep your existing policy and to take out an extra ‘top-up’ policy from another provider to make up the shortfall.

This is often the case with those who need to increase the agreed pay out, say for those who’ve had to increase their mortgage size or have had more children.

If you are lucky enough to have come into enough money to eradicate the need for your policy altogether, then cancelling is fairly straightforward and shouldn’t cost anything extra.

You should think carefully before cancelling your life insurance policy outright though, as you don’t want to leave your family in dire financial straits should the worst happen.

Changing life insurance provider

Changing life insurance providers can be a smart decision if you find a policy that better suits your needs or offers lower premiums.

Before switching, review your current policy for any cancellation fees or loss of benefits. Always ensure your new policy is active before cancelling your existing cover to avoid a gap in protection. 

When comparing providers, consider the level of cover, exclusions, premium costs, and the insurer’s reputation. Seeking advice from a financial adviser can also help you make an informed choice and ensure the process is handled smoothly.