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What should I know before changing an insurance policy?

June 11, 2018


Reviewing your insurance covers is important.  However, if you are changing policies, or insurance companies, being aware of the issues and your risks is very important. 

Here are the pointers to be aware of before you proceed:

  • Any premium savings can be offset by a reduction in cover – compare the policy wordings, not just the cost. Are the Exclusions similar?

  • What are the premiums projected over a 10 or 15-year period?

  • Check any “stand-down” periods during which certain claims will not be paid out, e.g. cancer, heart attack, suicide, HIV, etc.

  • Are pre-existing medical conditions excluded or determined at claim time?

  • What is the financial stability of the new insurer and their claims paying reputation?


What do I need to disclose?

  • Everything about your past medical history, including present health. If you’re unsure, ask your doctor(s) for a copy of their notes.

  • The above includes substance use, i.e. alcohol and drugs, both prescription and recreational.

  • Current occupation, pastimes, residency status and future travel plans may also cause a risk to the insurer and must be disclosed.


Other important details to keep in mind:

  • Have you read and understood the Advice on Policy Replacement form, recommended by the industry?

  • Is your new cover only effective if your old policy is cancelled?

  • If you are receiving advice from a Financial Adviser, have they provided you a written formal document, known as a “Statement of Advice”. This should include:

    • why the existing insurance is unsuitable for your current situation,

    • how the recommended cover is better suited,

    • associated policy replacement risks,

    • any limitations and conflicts of interest in offering the advice – this may include commission payable for the replacement cover.


The Financial Markets Authority and the Financial Services Council have further material on replacing insurance if you are seeking more information.


Finally, never cancel your existing policy before your new policy has been received, you have read it thoroughly, and it’s what you want.



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