The cover you bought for a life you no longer live

Comparisons of reviewing cover as life changes usually pick a winner. This one picks the circumstances, which is more useful.

Cover is arranged at moments, and life keeps moving

Most protection is put in place at a trigger point such as buying a home, having a child or starting a job that offered it. The amount and shape reflect the household as it was on that day, including who was earning, who depended on whom and what was owed. A decade later almost every one of those variables has changed, frequently in both directions at once.

Nothing in the system prompts a review, because a policy that continues being paid for is working perfectly well from the provider's perspective. The result is households paying for the wrong shape of protection and believing they are covered.

Under-insurance is the commoner failure

A policy sized against a first mortgage looks very different against a larger home, a second child and a partner who has stopped working. Households frequently discover the shortfall at the point of a claim, which is the worst possible time to learn it.

The useful part is this: the mechanism is simply that obligations grow steadily while the cover stays fixed at the level chosen years earlier. Anyone whose household has gained a dependant, a larger loan or a single-income period since arranging cover should assume a review is overdue. What level is appropriate depends on circumstances and is exactly the kind of question a regulated adviser is for.

Over-insurance quietly wastes money too

Households sometimes carry policies for obligations that have ended, such as a loan repaid or children who are now independent. Duplicate cover is also common, particularly where an employer provides benefits that overlap with something bought personally. Some people hold several small policies bought at different times, which together cost more than one appropriately sized arrangement would.

Cancelling anything requires care, because cover already in place may be cheaper or easier to keep than to replace after a health change. That is a genuine trap and another reason this is a conversation for an adviser rather than an afternoon with a comparison site.

The details that silently expire

Beneficiaries named years ago may include a former partner, an adult who has since died, or a child now old enough for a different arrangement. Trust arrangements, where used, may have been set up for a family structure that no longer exists. Contact addresses go stale, which matters because providers occasionally need to reach the policyholder and cannot.

These are the cheapest possible fixes and the ones most likely to have gone unattended.

A review that only corrected the names and addresses would still be worth the hour.

Employer cover is not yours

Death-in-service benefits, health cover and employer income protection are common and they belong to the job rather than to you. They stop when employment does, which is precisely the moment a household is most exposed and least able to buy replacements. People who have relied on employer benefits for years frequently discover this at redundancy or when changing jobs.

In practice, the amounts also vary substantially between employers, so a job change can quietly halve a household's protection. Checking what your new employer provides, and what it does not, belongs on the first-month list alongside the pension.

Some of this will suit you and some will not, and that is the point.

Attach the review to something

A review triggered by a date will be skipped, and one triggered by an event is much more likely to happen. The natural triggers are a birth, a move, a change of job, a separation, a bereavement or a significant change in income.

Each of those changes who depends on the household income and how much is owed, which is the whole basis of the calculation. A short annual check that nothing named on a policy has changed is a reasonable backstop between events. The households that get this right are not the diligent ones; they are the ones who tied it to things that were happening anyway.

Side by side

The takeaway

Tie the review to the events that change the household, because a date in the calendar will always lose.

Pick the one that costs you least, and let the rest wait.