How often should you review your protection and insurance

Protection and insurance policies are fairly easy to set up, but can be easy to forget about once they are in place. Payments leave your account each month, your cover continues and, unless you need to make a claim, you may have little reason to think about them.

But think back to when you first arranged your cover. Circumstances two, five or even ten years ago could look very different to now. Were you earning the same amount? Did you have the same mortgage, the same job or the same financial responsibilities? Perhaps you did not have children yet, or you were renting rather than owning a home.

The protection you chose was based on your circumstances at that point in your life. If those circumstances have changed, it is worth checking whether your cover has kept up.

What does protection and insurance actually cover?

Protection insurance is there to provide financial support when something unexpected affects you or your family. Exactly what that support looks like depends on the type of cover you have.

Life insurance, for example, can provide financial support for the people you leave behind if you die during the policy term. Income protection focuses on your earnings, replacing a proportion of your income if illness or injury leaves you unable to work.

Critical illness cover is different again. It usually provides a lump sum if you are diagnosed with a serious illness or medical condition covered by your policy. This could help with anything from household bills and mortgage payments to adapting to a change in circumstances while you focus on your health.

Then there is general insurance, including familiar policies such as home and car insurance. These protect against a different set of risks, but the principle behind reviewing them is much the same. The cover that suited you when you first took out a policy may not always be the cover that suits you today.

Why is it important to review your protection?

Your finances rarely stand still for very long. A policy arranged when you were single and renting might not provide the protection you would want after buying a home and starting a family. Equally, life insurance taken out alongside a mortgage several years ago may no longer reflect your current borrowing, while income protection based on an old salary may not align with what you earn today.

Reviewing your cover gives you the opportunity to look at the bigger picture. Do you still need the same type of protection? Is the amount of cover appropriate? Do you understand what each policy provides and where there may be limitations or exclusions?

Cost can form part of that review too, but cheaper does not necessarily mean more suitable. This is particularly important with protection insurance. Your age, health, lifestyle and other circumstances can influence the terms and cost of a new policy, so cancelling existing protection simply because you have found a lower premium elsewhere could have unintended consequences.

How often should you review your insurance and protection?

As a general guide, reviewing your protection and insurance once a year is a sensible starting point. This gives you an opportunity to consider any changes to your income, financial commitments or family circumstances, and check that the cover you have still reflects what you need.

For home and car insurance, the renewal date provides a natural time to review your policy. Protection insurance does not always fit quite so neatly into an annual cycle. Changes such as buying a home, having a child, changing jobs or separating from a partner can significantly alter your financial responsibilities.

If something important changes, it is worth reviewing your protection at the time rather than waiting for your next annual review.

Which life events could mean your protection needs reviewing?

Buying a home is one of the most obvious examples. Taking on a mortgage, moving to a more expensive property or significantly changing your borrowing can alter your financial commitments. It is worth considering what would happen to those commitments if you or someone else responsible for them died or became unable to work.

Starting or growing a family can change things considerably too. Once other people depend on your income, the financial consequences of losing that income can become much greater. The same applies if you take on responsibility for another financial dependant.

Your working life matters as well. A substantial pay rise or reduction in income could mean that existing cover no longer reflects your earnings. Changing jobs can have an even wider impact if your previous employer provided death-in-service benefits, income protection or other workplace cover that you will lose when you leave. Also becoming a Self-Employed individual or starting your own business will have a significant impact on your finances.

Then there are changes such as separation, divorce or approaching retirement. Each can reshape your household finances, responsibilities and priorities. Protection that had a clear purpose five years ago may not necessarily have the same role today.

You do not need to wait for several things to change before reviewing your arrangements. A single life event can significantly alter your financial responsibilities, the people who depend on you or the income your household relies on. Reviewing your protection when that change happens can help you understand whether your existing cover still reflects your circumstances and identify any areas that may need further consideration.

What should you look at when reviewing your protection?

A good protection review is about understanding whether the policies you are paying for still match your life and finances today. That means looking at the cover as a whole, rather than simply checking the monthly premium.

Your income, mortgage, debts and other financial responsibilities are all relevant when considering whether the amount of cover you have is still appropriate. If you have life insurance, it may also be a good time to check how the policy is set up and, where relevant, whether any beneficiary or trust arrangements continue to reflect your wishes.

Income protection has its own considerations. Your salary may have changed since the policy was arranged, while details such as the deferred period and the length of time benefits can be paid will determine how the policy could support you if you were unable to work.

Do not forget about any protection you receive through your employer either. Benefits such as death-in-service cover or workplace income protection form part of the overall picture and may affect the personal cover you need.

Affordability matters too. If premiums are becoming difficult to manage, it is important to understand your options before cancelling an existing policy. Depending on changes to your age, health or circumstances, arranging the same level of protection again in the future could be more expensive or may come with different terms.

Frequently asked questions

Does reviewing my insurance mean I have to change it?

No. A review is simply an opportunity to check whether your existing arrangements still suit your circumstances.

You may find that nothing needs to change. That is still a useful outcome because you know you have considered your cover rather than allowing it to continue unchecked.

Can reviewing protection insurance affect my existing cover?

Reviewing an existing policy does not change it. However, replacing your cover or applying for a new policy may involve questions about your health and lifestyle.

If your circumstances have changed since your original policy was arranged, this could affect the cost, terms or availability of new cover. It is important to understand this before cancelling an existing policy.

Should I review protection provided by my employer?

Yes. Workplace benefits such as death-in-service cover and income protection should be considered alongside any policies you hold personally. You should also consider any Private Medical Insurance cover that your employer might offer you.

It is also worth understanding what happens to these benefits if you change jobs or become self-employed, as employer-provided cover will not necessarily continue once you leave.

How do I know if my cover levels are right?

There is no single figure that is suitable for everyone. Your income, mortgage and other debts, regular expenditure, savings, financial dependants and existing workplace benefits can all affect how much protection you may need.

A financial adviser can consider these factors together and help you understand the level and type of cover that may be appropriate for your circumstances.

Is it worth switching protection insurance to get a lower premium?

It can be worth exploring your options, but price should not be considered on its own.

A new policy could have different terms, definitions, exclusions or levels of cover. Your age and any changes to your health or lifestyle may also affect what is available to you now. Make sure you understand what you could be giving up before replacing existing protection.

What if I cannot afford to keep paying for protection insurance?

If affordability has become a concern, consider speaking to your financial adviser or insurance provider before cancelling your policy.

Depending on the policy and your circumstances, there may be other options available. Cancelling could leave you without protection, and arranging similar cover again later may be more expensive or subject to different terms.

When should you review your protection?

There does not need to be something wrong with your insurance before you look at it again.

A yearly review gives you a useful opportunity to check that everything still fits. More importantly, significant changes such as buying a home, having children, changing jobs, separating from a partner or approaching retirement are all good reasons to revisit your arrangements sooner.

Your protection should reflect the life you have now, rather than the life you had when you first took out the policy.

If it has been several years since you last looked at your protection, or your circumstances have changed significantly in the meantime, speaking to a qualified financial adviser can help you understand what you have in place and whether it still meets your needs.