Should I stay or should I go? In the words of The Clash, it can be difficult deciding whether to stick with what you’ve got – or move on to something new. Different is not always better – but neither, necessarily, is the status quo. And so, we’ve got to let you know…
There has been some talk in the media over the last few months about unscrupulous brokers pressuring their clients to change life insurance policies. For many, the level of insurance taken out is akin to walking a tightrope – too little and your family could be left without enough to live on, too much and you could find yourself regularly out of pocket making the monthly payments.
The best policy for you is both affordable and with enough cover to see you right in a time of crisis. Due to the doubt and options available, some brokers are attempting to sign clients over to new policies with the offer of lower rates, with the hopes that the crisis never occurs.
As a business, we don’t believe in this approach for two very important reasons:
- New Zealand is a small country and word gets around quickly. A good reputation takes time to build. A bad one can be made in a day. Insurance is about trust and tarnishing the public’s trust in our work is the best way to ruin our business. It’s just common sense.
- It is all about getting the right cover that meets your needs. We want our clients to get the very best from our service – and we need to be proud of the work we put in each day.
There are times when changing policies just makes sense, however. Here are some points to consider before deciding if a change is right for you.
1. What have you got to lose? Your current policy terms are a big one. Once you hold a life insurance policy, the provider cannot change the terms and conditions to your detriment. Starting again, you may lose some of the benefits of the current policy. It is important to check the fine print carefully to make sure any new policy is as good (or hopefully better) than the existing one.
If you have had any changes in your health since taking out your existing policy, your current health status becomes your baseline for your new cover. This may mean that you end up with exclusions or terms that you didn’t previously have which, ultimately, may impact your future claims. So it’s important tyou understand any loadings or exclusions if looking to change insurers to ensure you are not going to be disadvantaged.
2. Are new benefits really ‘new’? Again, this is a matter of checking the fine print carefully. Often, any shiny new benefits being offered by a broker can already be found, albeit in less glossy packaging, in your existing policy. Are you actually getting better cover?
3. Do you ‘repair’ or ‘replace’? If finances are an issue with your existing policy you may be able to amend the policy to make it more affordable – and do so without losing your guarantee and with only minor changes to your cover. Contact your broker to find out what is possible and then compare the amended policy offer with the new one. You might be pleasantly surprised.
4. How important are policy reviews? Often, insurance is taken out in times of change. Many clients will begin insurance coverage when they are starting a family or buying a house. The decisions around the selected policy could be tainted by the stress of that event.
This can go two different ways. Sometimes a client will over-insure themselves out of love and care. Or they may be driven by finances and choose a policy that is affordable but doesn’t provide enough cover. In both situations it can be a good idea to review your cover when there are further changes in your life. So too is it good to check again every now and then to ensure your policy still makes sense (and is doing the job you purchased it for).
5. Are you changing for the better? There will be times when a new policy makes sense. It could be your health has improved, or your financial circumstances have changed, and your existing provider isn’t able to amend your policy (or can’t do so at a competitive rate).
To make sure any new broker has your best interests at heart, it is imperative that you sit down with them and discuss these issues. Ask them what they can offer that your existing policy doesn’t – and what you stand to lose. Ask how they will cover you while your policies are being switched over. Talk over the reasons behind their recommendations.
If they can’t give clear answers to these questions, it’s likely they are simply trying to make a sale. Conversely, if they are able to answer (and their rationale makes sense), then it could be time for a change.