Switching life insurance policies

How to change life insurance policies

Making the switch to a new life insurance policy can seem daunting, but it doesn't have to be. Here are the steps you can take to change policies and cancel your old one:

1. Consider your needs.

Your life has probable changed alot since you first purchased life insurance, and you may have new financial goals to consider. This may demand a different level of cover or an entirely different type of life insurance.

2. Compare what's out there.

Once you know what you want, it's time to start researching. Comparing the same level of cover across different providers is one of the best ways to find a great deal. Comparison sites can help you sift through and compare the range of options available online. Alternatively, consulting a financial adviser can take out the busywork and help you find a suitable policy.

3. Apply for a new policy.

You can start a quote online with most providers, though some more complex policies may need you to work with a financial adviser. Your new insurer will have to assess your risk, which can take as long as a few days to several weeks depending on the level of underwriting on your new policy. You may need to provide personal information about your health and lifestyle or undergo a more extensive medical exam. Many insurers will cover the cost of the medical exam if they think it's needed to assess your risk.

4. Make sure your new policy is active.

Before you cancel your policy, it's a good idea to ensure your new cover is active. This ensures there's no gaps in protection when you make the switch.

5. Cancel your old policy.

Once your new life insurance policy is active, it's time to leave your old one behind. Contact your insurer over the phone or online, and notify them of your decision to cancel. Cancellation requests need to be in writing and your provider will either send you a cancellation form to sign or ask you to write your own. You may also find a template on your provider's website.

Cancelling a policy outside of your cooling off period

Most life insurance policies will have a cooling-off period. This is a set period of time after you buy a policy where you can cancel your policy for a full refund, if you haven't made any claims. If you cancel your policy outside of this period you won't be entitled for any refunds. This is true for all the Australian providers we've researched.

What to consider before switching life insurance policies

Switching life insurance isn't a decision to take lightly, and it can come with some risks. You won't necessarily get the same rates as your current policy with a new provider, and any changes in your current circumstances can affect your insurability. So it's important to understand not only what you're looking for, but the possible implications of switching policies.

Here's a few points to consider:

• Sum insured: Think about your current and future financial responsibilities. Are you happy with the same level of cover or does it make sense for you to increase or reduce the amount you're covered for?
• Waiting periods: Switching to a new life insurance policy will likely have a new waiting period you'll have to sit through, which can delay benefits for certain claims.
• Medical health: If you've developed any new medical conditions since you first purchased life insurance, this can impact your insurability and premiums with a new provider.
• Contestability period: Switching providers means facing a new contestability period – which gives insurers the right to investigate any claims during this time. This means if a claim is made within the first two years of the new policy, the insurer can scrutinise your application details and potentially deny cover to you or your beneficiary if any discrepancies are found.
• Your age: Signing up for a new policy while you're older may lead to higher premiums due to increased risk. If you're older than 64, joining a new provider may not be worth the added cost.
• Tax implication: Be aware of any potential tax implications if you switch to a different type of life insurance, especially if your current life insurance policy is through your superannuation fund or employer.

If you're still unsure about your decision or need some further advice on switching life insurance, it's a good idea to talk to a financial adviser or life insurance broker. They can talk you through the implications of changing your policy and how your current circumstances may affect your insurability.

Can you change an existing life insurance policy?

Yes, you can! Many life insurers will allow you to change your existing life insurance policy to better suit your needs.

Start by reaching out to your current insurer to discuss your options – this may include:

• Adjusting your cover amount
• Adding on new benefits or riders to your policy
• Changing your waiting period

When to consider switching life insurance policies?

As you get older, it's only natural that your needs and wants may change. When it comes to life insurance, this could mean you need a different level of cover, a different waiting period, more benefits, or even an entirely different type of life insurance policy.

Here are a few events that might make you consider switching life insurance policies:

FAQs

• Can I change my life insurance beneficiary?

  You can change your life insurance beneficiary in Australia and it's a pretty straightforward process. What you'll need to do is:

  • Contact your life insurer – Let them know who you'd like your new beneficiary to be.
  • Fill out the necessary documents – Most providers will need you to fill out a change of beneficiary form. You can usually do this online; others will require you to print them out and mail them.
  • Send it over to your insurer – They should confirm with you when they've received and updated your nominated life insurance beneficiaries.

• Can I change the amount I'm insured for?

  Yes, and typically it's a pretty straightforward process. Many providers will let you do this through an online portal or by contacting the insurer directly over the phone.

  Most insurers have a future insurability feature, which allows you to increase your cover without having to undergo a new medical check. However, making a change to your sum insured will usually mean your premium is recalculated to reflect this new amount.

• Can you switch from one life insurance to another?

  Yes, you can! Switching to another life insurance policy involves applying for a new policy and filling out a cancellation form or letter with your current provider.

  Be aware that switching to a different provider will mean you'll typically have to sit through a new waiting and contestability period. Your current risk level may be different compared to when you first purchased life insurance, which can affect your insurability and premiums.