Transferring Life Insurance Policies: Is It Possible?

Life insurance is a necessity for many, especially those with dependents. But what happens when your circumstances change? Can you move your life insurance policy from one company to another?

The short answer is yes, it is possible to transfer your life insurance policy to another company. However, there are some important things to consider before making the switch. For example, some companies may charge surrender fees for switching, and most will require a health check when taking out a new policy. It's also crucial to ensure your new policy is set up before cancelling your old one to avoid being left without cover.

There are several reasons why someone might want to change their life insurance provider. This could be due to a change in circumstances, such as moving to a bigger property with higher mortgage payments, having children, or getting married or divorced. It could also be because they've found a better deal elsewhere or because their current provider doesn't allow for changes to be made to the policy.

Whatever the reason, it's important to review your life insurance policy regularly to ensure it still meets your needs and to compare different providers to find the best cover for you.

Review your life insurance policy regularly to ensure it reflects any big life changes

Life insurance policies are not set in stone. They can be adjusted to reflect changes in your life circumstances. Regularly reviewing your life insurance policy is crucial to ensure that it continues to meet your evolving needs and provides the intended financial protection. Here are some reasons why you should review your life insurance policy regularly to ensure it reflects any big life changes:

Keeping Pace with Life Changes

Life is dynamic, and your financial and family situations may change over time. Marriage, the birth of a child, a new home, or a career change can impact your insurance needs. Periodic reviews help ensure that your policy aligns with your current life stage. For example, if you've had more children since you first applied for life insurance, you may need to increase the amount of cover to reflect the additional financial responsibility.

Maximising Cost Efficiency

Life insurance is an investment, and you want to ensure you're getting the best value for your money. Reviewing your policy enables you to explore cost-saving opportunities, such as adjusting coverage amounts or taking advantage of discounts. For instance, if you've stopped smoking since taking out the policy, you may qualify for lower premiums with some insurers.

Adapting to Financial Goals

Your long-term financial goals may evolve, requiring adjustments to your life insurance policy. Whether it's planning for retirement, funding a child's education, or paying off a mortgage, reviewing your policy allows you to tailor the coverage to support your objectives.

Evaluating Coverage Adequacy

Life insurance needs vary over time, and what was once sufficient coverage may no longer be enough. Regular reviews allow you to assess whether the death benefit provided by your policy is still adequate to provide for your loved ones.

Beneficiary Updates

Your designated beneficiaries may change due to births, deaths, or changes in relationships. Reviewing your policy ensures that the right individuals are listed as beneficiaries.

In conclusion, reviewing your life insurance policy regularly is essential to ensure it keeps pace with your life changes and financial goals, maximises cost efficiency, and provides adequate coverage for your loved ones. By doing so, you can make any necessary adjustments to safeguard their future.

You can change life insurance companies and take out a new policy with another provider

Yes, you can change life insurance companies and take out a new policy with another provider. However, there are a few things to consider before you switch your insurance policy provider.

New Policy Considerations

When taking out a new life insurance policy, it's important to note that the new policy may have a contestable period. This is a standard clause in most life insurance policies, meaning that in the UK, if death occurs by suicide within the first year, the claim may be declined.

Some insurance companies will also charge surrender fees if you switch your life insurance to another company, but this only applies to whole-of-life insurance policies. Most companies will also require a health check when taking out a new policy, and your premiums may increase if your health has declined since your original policy was taken out.

It's also worth noting that some providers have age limits, and if you're over 50, a specialist policy may be the most viable option.

Switching Policies

Unfortunately, you can't simply transfer an insurance policy to another insurer. If you're surrendering your current life insurance policy, your new provider will ask you a series of questions to protect you from fraud or scams, such as "churning", where agents regularly change their clients' policies to earn a commission.

You'll need to provide the following information:

• Your current life insurance policy number
• Your current life insurance provider
• The expiration date of the policy
• Whether you plan to replace your old policy with a new one

Alternatives to Changing Provider

Instead of changing your life insurance provider, you could consider taking out a "top-up" policy with another provider. This is a good option if you need more cover, such as in the case of a higher mortgage or additional children.

You could also change the type of life insurance policy you have. There are several different types of life insurance available, including mortgage life insurance, term life insurance, and whole-of-life insurance. Speak to your insurer about changing the type of policy you have, as this could be a better option than switching to a new insurer if the costs are too high.

You cannot transfer an insurance policy to another insurer

• Apply for a new policy: The first step in transferring your life insurance policy is to apply for a new policy with the company you wish to switch to.
• Undergo the underwriting process: Once you apply for a new policy, the new insurance company will require you to go through an underwriting process, which includes an evaluation of your health, age, and other risk factors to determine the terms and premium of the new policy.
• Compare features and benefits: It is important to carefully compare the features, benefits, and costs of the new policy with those of your current policy. Since transferring might impact your terms and premiums—particularly due to changes in age and health—ensure that the new policy offers enhanced or comparable benefits.
• Terminate the old policy: Once you receive approval for the new policy from the desired company and are satisfied with its terms, you can discontinue your old policy. This should be done only after the new policy is active to avoid any gaps in coverage.

You can buy a second insurance policy if you want more protection

Yes, you can buy a second insurance policy if you want more protection. This is perfectly legal and can help cover insurance expenses, fill gaps in coverage, and provide additional financial protection.

There are several benefits to having a second insurance policy. Firstly, it can provide more comprehensive coverage by filling in the gaps of your primary plan. For example, if your primary plan does not cover your dependent parents, you can take out additional coverage. A second plan can also provide specific coverage for critical illnesses or maternity care, which are often not adequately covered by generic plans.

Additionally, a second insurance plan can offer permanent coverage. For instance, if you have employee health insurance, it may only be valid while you are employed by that company. By taking out a second, individual plan, you can ensure continued coverage even if you leave your job.

Another benefit is efficient policy management. With multiple policies, you can decide which policy to claim against, allowing you to keep one policy undisturbed and take advantage of a No Claim Bonus on renewal. Furthermore, having multiple health insurance policies can help you save on taxes, as premiums paid towards family, individual, or specific health insurance are eligible for tax benefits in some countries.

When considering a second health insurance plan, it is important to analyse your current health situation, understand the coverage offered by your first plan, and identify any gaps in coverage that you want to fill. You should also be aware of potential drawbacks, such as additional premium and deductible payments, navigating multiple policies and rules, and potential coverage overlap.

Overall, while there are benefits to having a second insurance policy, it is important to carefully consider your specific needs and situation to determine if this is the best option for you.

You can change the type of life insurance policy you have

Yes, you can change the type of life insurance policy you have. There are a few reasons why you would want to do this.

Your circumstances have changed

Perhaps your children have grown and no longer need support, you've gotten divorced, or your income or estate has grown in size.

Your current level of cover is no longer suitable

Maybe you want to switch from a term policy to whole life insurance to obtain permanent coverage. Or, conversely, you’d like to cancel your whole life policy for the simplicity of a term policy.

You're changing jobs

You may have switched employers and now need to consider the group life insurance benefits that you were receiving compared to the benefits at your new job, and whether you need to subsidise that coverage with a privately owned policy.

Your finances have changed

It could be that you can no longer afford the premium payments and need to adjust your coverage or find cheaper coverage. Or, you’ve decided you want to incorporate a cash value policy into your comprehensive financial plan.

Your health has improved

If you’ve made positive changes to your health, like quitting smoking or losing weight, since you took out the policy, you may qualify for a better premium.

If you want to change your life insurance policy, there are a few things to keep in mind. Firstly, check for any surrender charges. If you’re cancelling your permanent life insurance policy, you might be charged a fee. This amount decreases over the length of the policy, but it's worth finding out how much you'll be charged before you cancel.

Secondly, pay attention to taxes. There may be tax consequences to dropping your old policy, so consult a financial expert or tax accountant before committing to a new one.

Thirdly, know that prices may increase. Premiums on your new policy may be higher, or you may not be insurable under the same conditions based on your age or changes to your health.

Finally, it's worth comparing benefits. Look closely at the benefits of the new policies you are considering to make sure that you aren’t losing any coverage that is essential to you.

Frequently asked questions