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Tips for changing insurers

If you’re thinking of changing insurers, you need to be aware of the risks as well as the benefits. A new policy may look attractive, but will it give you the same level of cover?

You need to be especially careful changing insurance provider for health insurance, life insurance, total and permanent disablement, income protection and trauma insurance.

For these insurances, ask your adviser or the new provider to explain the advantages and disadvantages of replacing your current policy with a new one.  For example, will you be covered for pre-existing conditions?

Things to watch out for:

  • Check if there are any start-up fees (e.g. commission) that you’ve already paid for with your current policy, and will have to pay for again with the new policy.
  • If you purchased your current life insurance cover at a younger age, the same cover may now cost more in a new policy.
  • If there has been a change in your health, leisure activities or your occupation, the new policy may contain restrictions or exclude any developed or pre-existing medical conditions you may now have. It may also cost more.
  • Waiting periods (such as for trauma benefits) may start again with the new policy, leaving you without cover during this time.
  • Read the wording of the new policy carefully. Make sure the benefits are at least as favourable as your current policy.

Do you need to change insurer?

Check with your current insurer to see if they can change your existing policy to provide similar benefits to the policy you are considering.
Glossary: provider
A company such as a bank, finance or insurance company that creates and provides insurance, mortgage, banking, savings or investment products.
Glossary: adviser
A person who sells financial advice and/or products. They include financial advisers, insurance agents, planners, sharebrokers, mortgage brokers and bank managers or agents. They may be salaried, paid a commission or have an hourly rate.
Glossary: commission
The money paid to a broker, financial adviser or planner, who sell products on behalf of a company. Commission can be based on the number and/or the value of the investments they sell.
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