12 Days of Christmas - Day 5, Policy reviews

On the fifth day of Christmas

Cura gave to me

Policy reviews

Reviewing your protection insurance policy can bring huge benefits, whether it be life insurance, critical illness cover or income protection, and it actually doesn’t take as long as you would think. 

But, there are quite a few things that can go wrong and it’s important to only review your policy if the new cover is definitely better for you. Things to look out for include,

• New life insurance policies often have a 12 month exclusion for any claim that is related to suicide.
• Critical illness cover contracts are quite complex and you might have been covered for a condition in the past, that has a better claims definition than a new policy.
• Your original policy might have been accepted at standard terms, but if your health has changed a new policy might be comparatively more expensive. Sometimes it’s a good idea to keep the original policy and then simply top up with more cover.

   

These are some really generic points and before you replace your policy it is a really good idea to speak with an adviser first. There are technicalities with these policies that are not always obvious and an adviser can help you to see all the pros and cons of making this switch.

What are the benefits?

As the years go by, insurers are always changing their stance on different ‘risks’ such as medical conditions, travel and hazardous occupations or hobbies. This is often because of there being more up to date research and findings, and progression in treatments and technology. The options that are now available for people living with HIV have come on leaps and bounds, in the last couple of years. 

If you have used a protection adviser for your original policy, reviewing your cover will be even easier, as you can usually sit back whilst your adviser will do the review for you. 

When you originally took out your protection insurance policy, your application will have been reviewed and the terms you were offered based on your situation at the time. It could be that things were really straightforward for you, or it might have felt a hassle to find a suitable life insurance, critical illness cover or income protection policy. Insurers often change their stance on what are known as ‘risks’ and it could be that there’s a better or more suitable policy for you now. 

If you have a health condition, some insurers will offer you more favourable terms if a certain number of years have passed since your diagnosis. This is really evident when we support people that have lived or are living with cancer. Applying for insurance shortly after diagnosis or the end of treatment, can often come with higher premiums or exclusion on some policy types. The longer the time since diagnosis and treatment, the more favourable the options will be.  

A great example of insurers changing their approach can be seen with the recent pandemic. An insurer can normally refer to years of research on a health condition when making a decision, but they didn’t have that information available when COVID-19 came about. This led to insurers quickly reducing the amount of people that they would insure, as they had no idea what as to what the outcome would be.  Thankfully, now that some time has passed, many insurers underwriting limits have gone back to pre-covid levels.

Everything Changes Including You

As well as potentially receiving better terms, there are other reasons as to why reviewing your policy is so important. It could be that your life has changed massively, you could now have more children or a mortgage, you might have changed jobs, you might no longer need insurance at all after a big lottery win that’s paid off your debts.

You might have paid off your debts and now completely own your home, but you may have a new job that doesn’t come with any sick pay benefits. Remember from the 3rd Day of Christmas, statutory sick pay is just £2,697.70 for 6 and a half months!

All of these things can have a huge impact on how much insurance you should have. 

When you review your policy so much can happen, depending upon how you have changed. Your health might be better, so premium increases or exclusions on the policy may no longer happen. But on the opposite side, if your health or other circumstances have become more risky in the insurer’s eyes, it might be better to stick with your original cover. A good adviser will tell you to stick with what you have, if that is the right thing to do.

Though reviewing your policy is important, it’s even more important to pay attention to the fine details. As well as an insurer’s stance changing, their terms and definitions of conditions may have also changed. For example, you may have critical illness cover and be covered if you had a heart attack of any severity with the insurer you currently hold a policy with, whereas some insurers will only cover a heart attack above a certain severity. Some policies also come with children’s critical illness cover as standard, others don’t, so if this is something you want make sure that you know what the new policy offers before you change.

Value added benefits can change at any moment, and are exactly as they say, they’re just an added benefit to the policy that you have taken out. They are non-contractual and can change at any moment. That being said, they are still something to take into account when your policy is being reviewed, as they can offer a lot of extra benefits to you and your family, even if you don’t make a claim.

Case studies

• We spoke to a couple a little while ago that needed life insurance to protect their mortgage. They had a mixture of type 1 diabetes and a family history of bowel cancer, across their applications. We continued to review their policies and five years after the originals were set up, we arranged for them to have new life insurance cover that saved them £7.42 per month.
  
• We spoke to a man that needed life insurance in place to provide some financial security for his children, if he passes away. We arranged his first policy through a specific life insurance policy that we have access to, that allowed him to have the life insurance but with a permanent suicide and self-harm claims exclusion, due to his mental health history. Two years later we reviewed his policy and were able to arrange his life insurance with just an initial 12 month suicide exclusion and a saving of £10.88 per month.

   

As you can see, reviewing your policy sometimes gets you better terms and also a decreased monthly premium, so it can definitely be worthwhile.

Resources

GOV.UK. (n.d.). Statutory Sick Pay (SSP): employer guide. [online] Available at: https://www.gov.uk/employers-sick-pay [Accessed 24 Nov. 2021].