How do I change my life insurance policy?
Key takeaways
You can change your life insurance policy, and should consider doing so whenever your circumstances change
Periodically reviewing your life insurance can help you to assess if it still meets your needs
Changing the beneficiary is usually a straightforward - just contact your insurer
Can you change your life insurance policy?
Yes. You can – and should – change or update your life insurance policy to suit your evolving needs through life.
When you initially chose your policy, you likely considered your circumstances and selected a type of life insurance that matched your needs at the time. However, as your life changes – perhaps with new jobs, new family members, or new homes – your life insurance needs will change too.
How do I change my life insurance?
You change your life insurance by contacting the insurer. There are a few ways you might adjust your insurance:
Amending your existing policy
Purchasing additional insurance
Switching to a new insurer
Some insurers will have restrictions regarding which changes you can make to your policy, or charge fees for some changes. These should be detailed in your policy documents.
How do I change the beneficiary on my life insurance?
Changing the beneficiary (the individual designated to receive the payout upon your death) of your life insurance is usually a simple process achieved by contacting the insurer. Most insurers will provide a form for you to fill out, and changes can often be completed within a day.
However, there are some circumstances where changing the beneficiary might not be straightforward:
An irrevocable beneficiary is a person designated to receive life insurance payouts in a binding arrangement. This means that the beneficiary must agree in writing to any changes. This can complicate matters, especially if the relationship between the policy holder and the beneficiary has changed since the policy was taken out.
Changing beneficiaries can have inheritance tax implications if you pass away within seven years of making the change. It’s important to consider the likelihood of this when updating your policy.
Irrevocable beneficiaries
Inheritance tax considerations
How often should you review your life insurance?
A good rule of thumb is to give your life insurance an annual check-up. However, significant events like moving house, expanding your family, or a change in income would also be good times to give it a review.
Regular reviews ensure that your life insurance remains aligned with your current situation, offering the protection you want for your family. Ask yourself: is the cover still comprehensive? Does the policy type still make sense for you?
When should you change your life insurance?
Big events or life changes might prompt a reassessment of your insurance needs. For example:
A change in residence or a new mortgage arrangement can significantly affect your financial responsibilities. Lots of us take out a form of mortgage life insurance to ensure our family's housing security. However, if you move to a more expensive property or remortgage, your debt may increase, and so should your life insurance cover.
If you're ahead of schedule on your mortgage payments, you might no longer need as much cover as you initially thought.
It's a good idea to reassess your policy and possibly reduce the sum assured, which could also lower your premiums.
Property value appreciation is generally welcome news. However, it can have implications for inheritance tax. Your dependents could face a 40% tax on estates exceeding £325,000 – or £425,000 for inheriting a main residence.
A rise in your property's value could therfore mean a need for more cover. Life insurance can be a tool to manage this tax, and setting up a trust can be advantageous in this scenario.
The arrival of a new child or grandchild calls for a review of your life insurance. More dependents mean more responsibility, and your policy should reflect this to ensure their future security.
Any life insurance policies naming your spouse as a beneficiary will remain unchanged unless you update it.
If you take out a joint life insurance with a partner and then split up, you will need to change or cancel the policy. Your options are:
Split the policy
One person takes over the policy
Cancel the policy
There are many ways a career change can influence your life insurance needs.
A new job with a higher salary might mean you can afford higher premiums and a larger policy
A step-back in your career – such as going part-time to help with childcare – might mean that you are now making a less significant financial contribution to the household, and so your family could manage with a smaller payout in the event of your death
Moving to a riskier career path, such as a job where injury is likely, might mean that your need more comprehensive cover, and your premiums will increase
Whatever direction your career change takes you in, you should reevaluate if your life insurance still works for you.
You move house or remortgage
You pay off your mortgage early
The value of your property rises
Your family grows
You get divorced
You make a career change
How do I switch my life insurance provider?
Switching life insurance providers can be a simple process. Comparison tools like MoneySuperMarket can help you find new deals and assist with the transition.
