Be very cautious before cancelling an existing risk policy or allowing a policy to lapse by stopping your premiums. You may not be offered the same terms you had on you had on your original policy, particularly if your risk status has changed – for example, after a deterioration in health.
If your risk status has changed dramatically – for example, if you have contracted a terminal disease – you may be refused cover altogether.
Risk assurance has become very competitive, with the result that it has also become more complex as life assurance companies try to differentiate on product design.
The increased competition has also seen some life assurance companies luring top sales staff from other companies with perverse incentives, which could see these advisors acting in their own interest and that of their new employers rather than yours.
You need to be cautious when a financial advisor suggests that you switch insurance companies – the move may or may not be in your best interest.
Be particularly wary of products that have lower premiums now but allow for significant or vague increases in the future. You may find the future premium increases become prohibitive but you may not be able to change to another company because of the deterioration of your health.
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