Home Insurance Five Things to Think About When Buying Life Insurance

Five Things to Think About When Buying Life Insurance

1. Be honest about your medical history

Most claims are successful, but it’s important to give your insurer all the information they ask for. When you make a claim, they will check your medical history. If you didn’t answer truthfully or accurately in your application or didn’t disclose something, they might not pay out.

2. Read the small print

Make sure you know exactly what is and isn’t covered. Be aware that definitions and exclusions (what isn’t covered) can vary between different insurers. If you see something you don’t understand, ask the insurance provider, or your insurance broker or financial adviser.

Don’t forget to sign the ‘nominated beneficiaries’ form your provider gives you. This is so they pay the benefits to the person, or people, you chose to get this money if you die.  

If you don’t name a beneficiary then the insurer pays the proceeds into your estate. This could then take a long time to get to the person you want to receive the money, and could mean it is subject to inheritance tax.

3. You can change your mind

You have 30 days from buying the policy to change your mind and get a full refund.

4. Can you switch to a better deal?

If you’re young and/or healthy, it might be worth seeing if you can a better deal elsewhere.

But as you get older or develop medical problems, you might find it’s cheaper to stick with a policy you bought when you were younger.

If you decide to switch, make sure you don’t cancel your existing policy until the replacement policy is fully set up and you have made the first monthly payment.

When you’ve cancelled a policy, you can’t change your mind.

5. Consider a waiver

With some insurance policies, you can ask for extra features to be included. For example, if you pay a bit extra to add a ‘waiver of premium’ to your policy – your premiums will be paid automatically if you can no longer work due to accident or illness.

This is to protect against your policy being cancelled if you miss a monthly payment.

How to cancel life insurance

You can ask your insurer to cancel your policy at any time, but there are a few things to be aware of: 

  • replacement cover might be more expensive as prices generally increase with your age
  • if you have pre-existing medical conditions, they might not be covered by a new policy 
  • you won’t be able to reinstate the policy once it’s cancelled.  

There are usually no cancellation fees, so you’ll just stop paying for it – you won’t receive a refund of any premiums you’ve already paid. 

Ask your insurer for help if you’re struggling to pay

If you’re considering cancelling due to cost or affordability, it’s important not to cancel insurance you need – or to miss a payment. Instead, contact your insurer and tell them you’re struggling.

Insurers must support customers in financial difficulty, so they’ll explain your options and ways they can help. For example, they could set up an alternative repayment plan or adjust your cover to match your needs and lower the cost.