Key factors to consider when switching – or ditching – a policy

HEALTH

POLICYHOLDERS whose health has deteriorated since purchase should usually stay put.

Applying for a new policy means an insurer weighing up age, health, occupation, hobbies and family history – which might mean a leap in premiums or even a rejected application.

Conversely, people who have given up smoking or lost weight might find a new policy better value.

CIRCUMSTANCES

A POLICY purchased years ago might now fall short in terms of the sum insured. More cover may be wanted because of marriage, children or extending a mortgage.

Some insurers allow policyholders to increase cover. The premium will rise and the customer will normally not have to go through a rigorous application process. Conversely, if a mortgage has been paid off or children have flown the nest, then cover can be reduced – or even ditched.

TIMING

SWITCHING a policy can provide broader cover, though it depends on when the original plan was bought.

FIVE YEARS AGO:

A 31-year-old nonsmoking woman who bought £36,000 of life and critical illness cover for 20 years with Aviva would be paying £7.30 a month.

By switching to a new policy with Royal London, with 15 years of cover to match the same end date, the premium would rise to £9.50.

The extra premium gives better cover for 46 conditions and 32 less serious illnesses.

TEN YEARS AGO:

A 43-year-old nonsmoking man who bought £80,000 of cover for 25 years would pay £27 a month with Legal & General. A new policy with Zurich is better for 57 conditions, plus 37 less serious illnesses – but the premium would rise a third to £40 a month.