It is important to review your life insurance from time to time and particularly if you experience a change in your financial or personal life.
In this article, we'll explain when and how to review your life insurance. We also look at practical examples of when reviewing your life insurance policy could help to reduce your monthly premium whilst explaining what to look out for.
You can jump ahead to "How to review and switch your life insurance" if you are ready to start reviewing your life cover policies.
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Reasons to review your life insurance
A change in your life circumstances is a common trigger to review your life insurance and make changes where necessary to ensure that any financial needs are met after your death. Many circumstances could require you to review your life insurance and we explore the top seven reasons below.
1. Marriage / Co-habitation
If you start to share your finances with a significant other, you may want to review and change your life insurance to support them in the event of your death and vice versa.
2. Divorce / Separation
Separation of your finances through a divorce, separation or breakdown in a relationship where you shared finances will involve reviewing your life insurance policies, especially if you have joint life insurance policies or wish to change your beneficiaries. You can find more information in our article, "What happens to life insurance after divorce?"
3. Mortgage
If you purchase a new home and take a mortgage or change your existing mortgage it is sensible to review your life cover. Any change to the outstanding repayment amount or the term on your mortgage should be reflected in your life insurance policy so that you're covered for enough money and for as long as you need it.
4. Debts
You may need to change the amount and/or the term of your life insurance policy to ensure there is enough money to pay off any debts in the event of your premature death.
5. Dependents
It is good to review your cover to ensure that your dependents can be financially cared for in case your death happens before they become self-sufficient and financially independent from you. It is estimated that every year, 41,000 children under 18 in the UK lose a parent.
6. Occupation
Changing jobs can change your income, potentially changing the impact of your death on your family. You may have gained or lost life insurance benefits provided by your employer depending on your new employment contract. And for anyone who has taken the leap to become self-employed, there can be a lot of uncertainty about security so reviewing your life insurance should be a high priority to provide support if the worst happens.
7. Inheritance tax
If your inheritance tax liability changes, you may wish to review your life insurance so that you can fund the revised inheritance tax bill. The current threshold for inheritance tax is £325,000 per person in 2024/25 with a 40% tax charge applied to the value of your estate over and above the threshold unless the beneficiary is your spouse. You can check your inheritance tax liability by reading, "Inheritance tax explained".
Can you switch life insurance?
You can switch your life insurance policy, however, existing life insurance policies can have advantages and these need to be carefully considered before you switch. You may need to change your life insurance policy because your circumstances have changed and you need to adjust your life insurance amount or term to suit your new requirements. Occasionally you can secure a better price or product by switching your life insurance policy too.
Like any other insurance product, you should take a few precautions before you cancel any existing life insurance policy in case you become unable to reinstate it.
Switch life insurance for a better deal
You can switch your life insurance for a better deal. A better deal could mean a larger amount of life insurance for what you're paying or paying less for the same amount of cover. You may wish to switch your life insurance to a policy that provides more benefits and perks which we'll explain in the next section where we look at switching life insurance companies.
Switching to a higher amount of life insurance for the same price as you are paying can seem like a no-brainer and is perfectly possible. Below are a few examples of where you may find that the price of your life insurance has reduced and it is worth trying to find a better deal.
Examples of circumstances that will lower your life insurance premium
| Change | How it works | Potential saving |
| Given up smoking | If you were a smoker when you bought your life insurance and have since given up and had no nicotine or tobacco products for at least 12 months, you could switch to non-smoker rates. | Premiums can almost be halved in some cases |
| Improved health | If your existing life insurance premium was increased in line with poor health at the time that you applied, you can review this. Your premium may have been increased because of the medication you were taking or the time that had elapsed since you suffered a medical condition and reviewing this may reduce your premium. | Depends on the initial increase which could have been anywhere between 50% - 200% of the standard price |
| Rates reduced | Sometimes life insurance rates reduce due to market competition, meaning that a new life insurance policy could be cheaper even if your age has increased. | Variable |
Can I switch life insurance companies?
Yes, it is possible to switch life insurance companies but you'll need to complete the application process with the new company. The new application process may involve additional medical checks and/or a report from your GP but these are usually simple and the life insurance company will organise these with you.
As I mentioned earlier in the article, you should not cancel your existing life insurance policy until you've completed your new application and received your acceptance terms and conditions so that you can check that the new policy is preferable to your existing one.
There are some advantages to switching life insurance - here are a few:
Save money on life insurance premiums
If you find a lower price for your life insurance, you should check that it is offering all of the benefits within your existing policy before you switch life insurance policies. Importantly, check that it offers the same level of payout over the same number of years and doesn't have any additional exclusions.
Better claims outcomes
Life insurance companies usually release the percentage of claims that result in successful payouts each year and a higher rate of claims paid can be an attractive reason to switch. However, you should check the statistics over some years rather than in one year alone.
Added perks and benefits
It is quite common to find 'living benefits' within life insurance policies such as access to mental health support, bereavement counselling, virtual access to GP appointments and fitness and wellbeing support. Changing your life insurance policy could provide you with some valuable and useful perks that your existing life insurance policy doesn't provide.
Avoid life insurance deals that look too good to be true
Life insurance policies can be littered with jargon making it difficult to work out how the benefits within your policy work. You'll even find that the same benefits can be referred to using different terminology depending on the life insurance company.
You should look out for life insurance brokers that try to blind you with the amount of cover you can get without talking about the benefits and exclusions that exist within the life insurance policy.
During my 20-year career in personal insurance, I have heard customer stories of brokers telling them that terminal illness benefit was the same as critical illness benefit when the first is usually free and the second costs 3-4 times as much because it will pay out even if you survive and live a full life. I've also heard from customers who have been online and have bought what they thought was a better deal for their life insurance, only to find that the new policy doesn't run for long enough or is the wrong type of life insurance for their needs.
There are countless examples of a life insurance deal looking better than it actually is and it is easy to make costly mistakes that end up leaving your family without the kind of financial security that you had planned for.
Speaking to a life insurance expert* at no cost will help you to decide whether switching life insurance companies is the best course of action for you.
How often should I review my life insurance?
You should review your life insurance at least once a year and when significant events take place such as:
- Marriage
- Divorce
- Birth of a child
- Change in income
- Borrow money
How to review and switch your life insurance
Changing your life insurance policy doesn't have to be difficult but there are mistakes to be avoided. It can be easy to overlook something when you find a cheaper price or what looks like a better cover. The devil is in the detail which should be checked and double-checked.
Firstly, do not cancel your existing life insurance policy until you have applied for the new life insurance, received your terms and conditions of acceptance and compared these with your existing life insurance policy. Take the time to make sure that all your information is correct and that the terms and conditions reflect what you expect.
Secondly, check the date that you pay your premiums for your existing life insurance as most life insurance policies are paid for in advance meaning that you will usually be insured for a month from the last collected payment date. If you start your new life insurance policy whilst the old one is still covering you, you'll be paying for two lots of cover in one month. If you would prefer to avoid the overlap, you can provide a delayed start date for your new policy so that it picks up where the old one stops.
If you're coming up on a birthday this might increase your life insurance premium so bear that in mind. Be careful that you don't leave any gap between the two insurance policies.
Lastly, ensure that you have all the documents for your new life insurance, either electronically or in paper format stored safely where others can find them.
Whilst there may be good reasons to change your life insurance policy, there are a few things that you should do to ensure that you don't end up worse off. If you are unsure, consult a life insurance expert* who will explain things in layman's terms and can even take on all the work of switching your life insurance for you at no extra cost. If you end up buying your new life insurance policy this way, you'll receive up to £100 cashback as a Money to the Masses reader.
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. This link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article
