Changing life insurance – what you need to know before switching life insurance policies

If you have a life insurance policy, it is a good idea to regularly check your cover and make sure it still reflects the financial needs of you and your family.

couple switching life insurance online

February 11, 2022

Whilst your life insurance policy may have suited your financial circumstances at the time of inception, major life events like having a baby, taking on a bigger mortgage or getting a divorce can mean your existing insurance policy is no longer adequate and needs updating.

However, if you feel your current life insurance policy is underperforming, has become too expensive or no longer meets your long-term needs, you may be tempted to jump ship altogether and swap policy providers.

Whilst making a change to your existing policy with your existing provider doesn’t usually create any major issues, changing life insurance providers isn’t quite as straightforward and requires careful consideration.

Here’s what you need to know about changing or switching life policies including checks you should make before swapping providers.

Why should you get life insurance with a different provider?

Can you switch life insurance providers?

Things to consider before changing life insurance providers

How to change your life insurance policy or provider

Why should you get life insurance with a different provider?

The main reasons you may want to change life insurance providers are:

You want a better deal

Term life insurance payouts can severely diminish in value over the years and fall way behind inflation if they’re not increasing or index-linked life policies, meaning your current cover may not be sufficient and won’t cover all your current financial commitments and liabilities.

You can’t make changes to your existing policy

Reporting a life insurance change of circumstances is common for long term policyholders and whilst most life insurance providers will allow you to make changes to your policy (such as the name of the beneficiary, its term or value), others won’t. If this means you’re left with a life policy that isn’t fit for purpose, you may need to completely cancel life insurance policy and start afresh with a new provider.

You want to cash out a whole life policy

There are many reasons you may want to cash in your life policy such as helping a child pay a deposit on their first home or to clear spiralling debts. Another reason may be that you’re now solvent and want to use the money to enjoy your retirement as your children have left home and are financially independent.

Additional cover

If you can’t get the cover you need with an existing provider, they won’t let you amend your policy or you want to avoid paying a hefty cancellation fee, you should consider taking out an additional policy with a different provider to ‘top up’ your existing life cover.

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Can you switch life insurance providers?

Yes, you can easily swap providers to find a better policy with a different provider that better suits your current needs and financial circumstances.

However, before making the switch, as well as making sure you choose the best life insurance provider and policy, there’s important stuff you should know and fully consider.

Read: Which life insurance policy should I get?

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Things to consider before changing life insurance providers

Some of the pitfalls of changing your insurer can be:

Surrender fees

Some whole of life policies will require payment of an early cancellation fee so check with your existing provider (or the terms and conditions of your policy) before changing.

Health checks

You may be required to have a health check for a new policy and if you now have certain health conditions that you didn’t have before (when you took out your old policy), your premiums could cost a lot more.

Age limitations

A new policy could be a lot more expensive when you’re older, especially if you’re over 50, so you should compare life insurance quotes before switching to see how your age affects your premiums.

Contestability period

When you take out a new policy there will be what is known as a ‘contestability period’ for the first year or two meaning that if you should die during this period, an insurer can refuse to payout.

If you’re over 50 and have health conditions that significantly increase your premiums, it might not be worth swapping insurers, but it could be worth taking out additional cover such as an over 50s life insurance policy to ‘top up’ your cover as no medical checks are necessary.

Important: If you’re going to switch insurers and cancel your existing policy, make sure you have a new policy set up and active before you cancel your old one. Also, if there is a contestability period on your new policy, if you can afford to, consider having both policies running concurrently until the contestability period expires on the old policy.

You might like: Life insurance for over 50s - What you need to know

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How to change your life insurance policy or provider

To fully consider the implications of changing policies or providers (i.e. to ascertain whether taking out a brand new life insurance policy will be a better option for you), here’s what you should do.

Decide what cover you need:

  • Consider the amount of money you would like to be paid out from your policy upon your death - i.e. to clear your mortgage, pay the rent or clear debts - by adding together all the expenses your dependants currently rely on you to pay for.
  • Consider the type of policy you’d like and whether you can afford it. Whole of life insurance costs more but will cover you until whatever age you die whereas term life has cheaper premiums but only pays out if you die during the policy’s term. You may also want to think about critical illness cover.

Contact your current insurer to check:

  • What types of changes can be made to your existing policy (e.g. can you change the beneficiary name, term or value of your policy?) and will this cost you anything?
  • Whether you can change to another policy with your current insurer, without compromising the value (payout) of your existing policy. Also, check whether any new health checks will be necessary and if a new contestability period will start if you change policies.
  • Whether any cancellation or transfer fees are payable if you change policies or providers
  • What the surrender or cash-in value is for a whole of life policy

Compare life insurance quotes:

  • Use an online comparison site to compare quotes for new policies
  • Read the small print (terms and conditions) of comparable quotes to check what’s covered and what’s not (i.e. what’s excluded from cover)
  • Once you’ve found the best quote, weigh up if the savings made on taking out a new policy are greater than the cost of surrendering your existing one
  • If quotes are coming back too high due to your age or a health condition, you should instead compare quotes for term life (instead of whole life) and/or over 50s life insurance.

Bobatoo works with the very best life insurance providers in the UK who are branded household names synonymous with the provision of quality insurance products such as Aviva, Legal & General, Royal London, Scottish Widows and Zurich - to name but a few.

Click the button below to let Bobatoo search for the best life insurance quotes from trusted providers offering the highest levels of cover on all types of life insurance.

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