Life insurance is designed to act as a financial safety net, but it’s natural for your needs to change over time. The good news is that most life insurance policies in New Zealand are flexible. Whether you’re looking to adjust your level of cover, add or remove benefits, or cancel altogether, there are options available.
Understanding Flexibility in Life Policies
Most life insurance policies include a 30-day “free-look” period, which allows you to cancel without penalty if you change your mind early on. Beyond that, policies can still be adjusted or cancelled at any time by contacting your insurer.
- Cancelling: You can stop your cover at any point. If you’ve paid in advance, you may be eligible for a refund of unused premiums.
- Changing: You can usually increase or decrease your cover, add benefits (such as trauma cover), or switch to a different type of policy. In some cases, changes may require updated health information.
Common Reasons for Cancelling or Changing Cover
- Life events – such as marriage, having children, or buying a home.
- Budget changes – adjusting cover to make premiums more manageable.
- Better deals – finding a policy that offers more value for your situation.
- Health improvements – positive lifestyle changes can sometimes reduce costs.
How to Cancel or Change a Policy
The process is generally straightforward:
- Contact your insurer directly (by phone, email, or app).
- Provide your policy details.
- Confirm your request in writing.
Most changes take effect from your next billing cycle. If you’re switching insurers, it’s important to have your new policy in place before cancelling the old one to avoid gaps in cover.
Costs and Considerations
- Fees: Cancellation or changes rarely involve high costs, though some insurers may charge small administration fees.
- Tax: Life insurance premiums for personal cover are not usually tax-deductible.
- Hardship options: If affordability is the issue, some insurers allow you to pause or reduce cover temporarily instead of cancelling altogether.
Pros and Cons of Cancelling or Changing
Pros:
- Tailor your cover to match your current needs.
- Potential to reduce costs.
Cons:
- New policies may be more expensive if your health or age has changed.
- Cancelling without replacement cover could leave you without protection.
FAQs
Can I cancel my policy at any time?
Yes. Most policies can be cancelled at any time, though investment-linked products may have additional considerations.
Will changes affect my premiums?
Yes. Increasing cover will raise premiums, while decreasing it will lower them.
Do I need a reason to cancel?
No, but it’s helpful to discuss options with your insurer before making a final decision.
What if I have trauma cover attached?
The same rules apply, though medical checks may be required if you make significant changes.
When should I review my policy?
It’s best to review annually, or after major life events.
At LifeDirect, we make it simple to compare policies from different insurers and adjust your cover as your life changes. That way, your insurance stays relevant and continues to give you peace of mind.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
