Many insurance policies on the surface look very similar and may even have comparable prices, but do you know whether the policy is able to adapt to fit your changing needs at each stage of your life? Just this week I reviewed a policy for a client who hadn’t reviewed their cover for a number of years and who was unsure of what type policies they even had in place. As it does for most people, their personal and family situation had changed since they first set it up, but because their original policy had been set up with an insurer who had flexibility to change their product, making amendments to the type and level of cover to suit their new situation was relatively straight forward.
So what sort of life changes would make you see the need to amend the type of cover in place? The most common triggers for people to look at reviewing the type of cover held are a change of marital status (either getting married or separating), buying a house, having a baby, children leaving home and travelling. But what sort of changes need to be made to make sure that the policy you have today reflects your current needs rather than those when the insurance was originally set up?
For a change in marital status, the first change that most commonly needs to be made is an amendment to the ownership of the policy. The owner of the policy in most situations is the person or entity who receives the money whenever there is a claim payment to be made. Obviously, in the case of a divorce, having the funds go to your ex may not be the most favoured option, especially if you have started a new relationship in the meantime. On the reverse of that, allowing your new partner to become a co-owner on your policy can mean that funds may be accessed when they need them, rather than facing the stress of going through drawn out dealing with solicitors if no estate planning has been arranged.
Buying a house can often involve taking out a large amount of debt, and consequently it is important that your personal insurance reflects any increase to cover your liabilities if anything were to happen to you. If not covering the full loan amount, (which is recommended), the amount of cover should at least reduce the financial impact of death or disability of a loved one to a more manageable level. Many insurers will actually have in-built features on their policies whereby the amount of life cover in place can be increased without the need for a full application or any medical underwriting, and it would pay to talk to your adviser to see whether this is an option for you. But it is not just the change of financial position when buying a house that should be considered as a time to review your cover. We recently had some clients who due to a large reduction in the level of their liabilities were able to amend the type of cover, which allowed them to improve their household cash flow moving forward.
There are many other situations, where a change in circumstances or lifestyle may see a review of insurances benefit the policy holder. Changes in weight, giving up smoking and health improvements may see reductions in premiums or the ability to obtain cover for previously excluded health conditions. It may not always be to your advantage to amend the insurance currently in place, but a full review of your policies with your registered insurance adviser will give you peace of mind that the cover you have in place is the correct type. They will also be able to advise if there are changes that can be made to provide you with amended personal insurance at the right price, to make sure that you, your family and your financial interests are protected, whatever stage of life you’re at.
