Life insurance – upgrade your policy or stay the same?

As with any financial product or service in your life, it’s wise to review your existing life insurance cover every few years or at the time there is a distinct change is your life, such as marriage or new baby. For a quick review of your life insurance status, ask yourself these questions.

Do I need to increase or decrease my cover?

This is one of the most common questions about life insurance. Your needs may have changed. For instance, you may have recently bought a nice shiny house with a nice shiny mortgage. You may have got married, divorced, had children or even paid off your mortgage. Changes in your life may signal changes are needed in your life insurance cover.

Can I switch my life insurance policy and what are the benefits?

It always pays to keep abreast of what’s on the market and that goes for life insurance as well. Since you took out your policy, there may be a cheaper policy that’s come on to the market. It may mean you can save money on the premium, or that you can get added cover for the same premium you are paying now. You may want to add on things that did not exist when you first took out your policy, such as accident insurance, critical illness insurance or other policy extensions.

Are there any negative consequences of switching?

The downside of changing life insurance policies in New Zealand is that there may have been minor changes in your health since you took out your original policy. A new life insurance policy may not necessarily cover you if they consider you have a pre-existing condition. So don’t throw the baby out with the bathwater.

Remember, some life insurance is better than none and it’s essential if you want to avoid leaving your loved ones with the legacy of a financial mess to sort out in your absence.

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