There are a number of reasons people take out life insurance policies, and it’s often at different life stages the policies are bought
The earlier you take a policy out, the more likely it is that you’ll need to make changes to existing life cover. Sometimes, it may be through a necessity to cut your monthly costs by switching provider, other times it’ll be a change to your personal circumstances that calls for a revision to your life insurance policy.
It’s when that time comes that you need to call on the support of your insurance provider to be flexible to your needs. Many will have strict policies about making changes, and the changes will be reflected by a change to your monthly premiums – sometimes for the better, other times at a higher cost. It depends on the changes you want to make.
Anytime there’s a big shift to your personal circumstances is a good time to get advice about your life insurance arrangements. This could be with your existing insurance provider, or with an independent financial advisor.
Many people take out a life insurance when they buy their first home. The reason is to ensure that in the event of death, their loved one(s) has financial support in place that will see the mortgage paid off from the insurance policy.
For couples, the largest family change is when a new born arrives. That’s a definite change in circumstances that will call for your insurance cover to be reviewed because you need more cover than just the mortgage to be paid. There’s a new baby with decades of financial support to be provided, therefore an increase to your policy amount would need to be discussed with your existing provider, or taken out with a new insurer.
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Another situation that calls for a revision to your life cover plan is when the amount of cover you’re insured for no longer covers your total outstanding debts. Or when you’ve paid down your debts and now want to decrease your total amount of cover to reflect the lower amount of outstanding debts. A large amount of insurance policies are taken out to pay for debts at the time the policy is purchased. As you’ll know, debts come and go so the amount of cover you need in place to repay all your debts will change frequently.
Should you upgrade your home and take on a higher mortgage, that’s more debt. Buy a new car on finance, more debt; make home improvements using a secured loan that’s more debt again. Each time you take on a large amount of debt, your policy should be revised to ensure you have enough cover to repay the total amount owed to creditors. Should your family need it at one of the most distressing times they’ll face, they will need your level of cover to be sufficient without any significant shortfalls.
It’s for this reason that when you’re comparing life insurance quotes, it’s a good idea to review the customer services and support from any life insurance provider you’re considering
The reason being, you will need to call on their support whenever there’s major changes to your personal circumstances. All major insurance firms are aware of the need for changes, and many of them will do so without any problems.
Where you may find some challenges is when you leave things too long that there are too many changes and your policy has a critical illness policy in place. Should your health worsen during the term of your policy and you need to make changes, insurers can request a medical to confirm you’re in good health. This can work in your favour just as much as it can for the insurer.
One situation where a medical will benefit you is if you need to notify your insurer that you’ve stopped smoking, or some health condition that you had listed, which is no longer an issue, could see your premiums reduce. Then again, the opposite could happen if your health has deteriorated and new clauses could be put into your policy.
In most cases, it’s best to work with your existing insurer to make changes, before looking at switching providers. The reason being, any time you switch to a new insurance provider, you’re starting from scratch. There’s not very many life insurance policies and critical illness plans that come as standard. Many have different clauses, various terms, and a lot of conditions that need to be met for the policy to pay out.
It is always worth checking however to see if you can lower your premiums and you can do so by obtaining a new life insurance quote.
Speak to the customer services department of your existing insurance provider
This is the first place to call for support and it’s what they’re there for, to provide any assistance you need with any of the company’s products. Not all operate the same as there are some insurance firms that won’t let you decrease the amount of cover you have, but they’re all likely to allow you to increase your level of cover. The main reason being the premiums will go up in line with the amount of cover, but they won’t want to bring those premiums down. As mentioned though, there are some insurance firms that are very flexible and will allow both decreases and increases to your level of cover.
For health changes, you can find that a medical may be required to confirm any changes or to get a more thorough assessment of your current health before the insurer will agree to the changes
Should your circumstances call for an increase to the total amount of cover you need, one option to definitely consider is making no changes to your existing policy and to take out additional life insurance. There’s no limit to the number of life insurance policies you can have, so if your debts have increased (for example) by £20,000 since you took out your existing life cover, a top up life insurance policy for the £20,000 or a little more is likely to work out cheaper than a single policy with an increase to your level of cover.
Before agreeing to any changes…
Compare other policies thoroughly
When you make changes to your life insurance policy, it’s often reflected with a higher monthly premium. When that happens, you can compare life insurance quotes online, or call around different firms to get quotes for what you need, or get advice from a professional independent advisor, who is legally bound to tell you the truth about what’s best for you.
Before taking advice from an advisor, be sure to ask them if they’re tied to any insurance provider. Some advisors are tied, which means they can only recommend insurance policies from firms they’re tied to. They can’t compare all plans from all providers and advise on the best. Worse still are the sole-tied advisors as they’re only loyal to one insurance firm, which means that’s the only provider they can compare products for and therefore can’t advise on what’s available elsewhere. As moneyhighstreet.com put it, “This can be limiting in that even if there is an alternative, better product – the agent cannot tell you about it.”.
The only way to get impartial and unbiased advice about what insurance policy is best for you is to get your advice from an independent advisor. As the name suggest, they operate independently with no ties to any insurance firms. You can also conduct your own research by obtaining free life insurance quotes online.
If you choose to do your changes alone without advice, be sure that you do thorough research on the company, the policy and the terms and conditions attached to your policy before proceeding to buy a life insurance policy
Cancellation as a last resort
The decision to cancel a life insurance policy cannot be taken lightly. The main reasons being that it might prove difficult to get the same level of cover in the future due to changes to either your family circumstances, higher level of debt reflecting a higher level of cover being required, at an older age and possibly with deteriorated health.
The only time a cancellation should be considered is either 1) You’ve come into a lump sum that can be put into safe investment options or a savings account to cover any expenses you need that your policy was intended for, or 2) When you’re taking out a new insurance policy from a different insurance firm, on better terms.