Switching Life Insurance Policies

Why do people change their life insurance policies?

Are you looking to switch your life insurance from one insurer to another? You're not alone. But before you do you should make sure you're making the switch for the right reason.

Reasons why people switch life insurance policies are:

  • Reaching the end of term. Generally when you take out life insurance in Australia, you'll be asked to select the length of time you want cover for. This period of time is what is referred to as the term. Generally once someone reaches the end of a term, they will reassess their situation and need for life insurance.
  • Change in circumstances. Due to the long term nature of most life insurance policies, there is a good chance of your circumstances changing over the term of the policy. Some people end up switching life insurance policies when they realise their existing one no longer meets their needs.
  • Financial reasons. One of the reasons why people decide to switch life insurance policies is because of the cost of premiums. This can happen for several reasons including the premiums becoming too expensive due to age or the amount being cover becoming excessive due to changes in the family dynamic (such as children no longer being financially dependent).

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Compare Life insurance quotes from these direct brands

Rates last updated December 12th, 2017
Name Product Maximum cover Maximum Entry Age Minimum Sum Insured Guaranteed Future Insurability Expiry Age Short Description
$15,000,000
69
$0
Yes
99
Get a quote for up to $15 million in life insurance cover. Cover can be tailored to meet your personal needs.
$1,500,000
65
$3,000
No
80
Choice of cover options and flexible premiums to suit budget. No lock-in contracts and fast application.
$1,500,000
65
$100,000
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99
Receive a discount of 10% on life insurance as a Woolworths Rewards Member. T's and C's apply.
$2,000,000
59
$50,000
Yes
99
Get flexible life insurance up to the sum of $2,000,000.
$1,000,000
64
$100,000
No
Get a refund of 10% of the premiums you've paid (in the first 12 months) with The Real Reward™ .
$1,500,000
69
$0
Yes
99
A simple life insurance product that can offer up to $1,500,000 in a lump sum payment on death or diagnosis of terminal illness.

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What do I need to consider when switching policies?

Whilst switching life insurance plans isn't a big hassle, there are some important things that you need to take into consideration including:

  • Higher initial premiums. When you switch to a new life insurance policy you may find that your premiums are higher than expected. This may be because commission and sales may have been worked into the price.
  • Long waiting period. You may find that there is a fairly lengthy waiting period before you can claim on your new policy, which could be a concern for some people. This is something you should check carefully before you make the switch.
  • Reputation. If you are switching to a new provider, you should make sure that you do your research and find about more about the company and how well known/experienced the company is when it comes to life insurance services.

Can I have two life insurance policies at once?

The simple answer to the question is yes you can and there are many reasons why you might need to do so. However, although you can have more than one life insurance policy on your own life, it can be an expensive way of giving yourself the cover you need. If you can find a way of only having only one life insurance policy to look after all your needs, you should be able to finish up with the same amount of cover at a much lower cost.

What do I need to consider when obtaining multiple life insurance plans?

Taking out multiple life insurance policies is perfectly acceptable and can actually provide increased peace of mind and protection for you and your loved ones. However, there are some things that you need to bear in mind if you are considering taking out multiple life insurance plans:

  • Managing multiple plans could be more difficult. Although having multiple life insurance plans in place does offer greater security and peace of mind, it can also cause more confusion and become more difficult to manage. The more life insurance plans you have, the more time you will have to put into managing and reviewing them, so you should bear this in mind when considering multiple plans.
  • The cost implications of multiple plans. If you take out multiple life insurance plans, it also means that you will have to pay a multiple of the specified premiums, which can be costly in the long-term.
  • Time implications. When you take out multiple life insurance plans, you will have to dedicate more time not only to finding suitable plans and providers but also in terms of reviewing and checking your life insurance plans and coverage.

Richard Laycock

Richard is the insurance editor at finder.com.au. He is on a mission to make insurance easier to understand.

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