Reviewing Your Protection Policies: When and Why to Reassess Your Cover

Life insurance, critical illness, and income protection policies are often purchased once — on the occasion of a mortgage, the birth of a child, or the start of self-employment — and then left unchanged for years or decades. This set-and-forget approach is understandable: the policies are typically structured as recurring direct debits and require no day-to-day management.

However, circumstances change substantially over a lifetime. Incomes rise, families grow, estates appreciate, businesses are built, properties are acquired, and financial planning priorities evolve. A policy designed for your circumstances a decade ago may be inadequate, misdirected, or structurally suboptimal for your circumstances today.

A structured, periodic review of existing protection policies is as important as an annual review of investments or pensions.

When to Review: Life Trigger Events

Certain events should prompt an immediate review — not a scheduled one:

Marriage or civil partnership. Your estate planning beneficiaries change. Expression of wishes forms for group life and any policies in trust should be updated. Joint life first death policies may become appropriate.

Divorce or separation. Nominations may name a former partner. The divorce does not automatically remove their name from an expression of wishes form. Life policies written under trust should be reviewed with a solicitor to assess whether the trust structure and beneficiary designation remain appropriate.

Birth or adoption of a child. A family income benefit or term policy may need a higher sum assured. Expression of wishes forms should include the new child. Consider whether children's critical illness cover should be added if not already in place.

Significant income increase. If your earnings have risen substantially since the policies were written, the sum assureds — particularly on income protection (typically set at 60–65% of earnings) and life cover designed to provide income replacement — may no longer be proportionate.

Mortgage increase or property purchase. The outstanding mortgage is the primary liability that life cover is designed to address for most households. An additional property or a remortgage to a higher value requires the life cover to be revisited.

Starting a business. Becoming a shareholder or director creates key person insurance and shareholder protection considerations distinct from personal protection needs.

Receipt of inheritance or other windfall. A sudden increase in estate value may create or significantly increase an IHT liability. Whole of life assurance written in trust may need to be arranged or scaled up.

Health diagnosis. If the policyholder develops a significant health condition, acting promptly is important. If additional cover is needed, it should be arranged before the condition deteriorates — because any new policy will be underwritten on current health. Waiting until a condition is advanced may result in decline or prohibitive loading on any new policy.

Assessing Whether Sum Assureds Remain Adequate

Protection policies are typically set at inception as a multiple of salary or a fixed sum. Both methods become outdated if left unchecked.

Salary multiple-based income protection: income protection set at 65% of a salary of £80,000 at inception (£52,000 per annum benefit) may be inadequate if salary has risen to £150,000. The benefit is capped at the original definition; the premium does not automatically scale. Review whether the policy allows benefit increases without new medical underwriting (many policies include guaranteed insurability options — GIOs — that permit benefit increases on life events without fresh medical evidence).

Fixed sum life cover: a £500,000 life policy taken out ten years ago has the real purchasing power of approximately £390,000 today (at 2.5% average inflation over 10 years). For pure income replacement, this reduction in real terms matters over long periods. For IHT planning, the relevant liability is the actual IHT bill, which changes as the estate value changes — not the original policy sum.

Critical illness sum assured: as with life cover, consider whether the CI sum assured still meets the purpose for which it was designed — typically covering the mortgage, or providing a capital fund for rehabilitation and treatment. Medical costs and property values have both risen significantly over the past decade.

Checking Policy Definitions

Protection product definitions have evolved significantly over the past 15–20 years. Older policies — particularly critical illness policies from the early 2000s — may have materially narrower definitions than current market standards.

Areas where older policy definitions may be weaker:

Critical illness cancer definitions. Modern CI policies use the current ABI model wording, which aligns with contemporary oncological classification. Older policies may exclude certain cancers that are now standard covered conditions — including some specific tumour types and cancer classifications introduced after the policy was written.

Heart attack definitions. High-sensitivity troponin assays (a modern cardiac biomarker test) can diagnose myocardial infarction earlier and at lower severity than previous biomarker tests. Older CI definitions based on outdated enzyme threshold reference ranges may not be met by cases that would now clinically be diagnosed as myocardial infarction.

Terminal illness acceleration on life policies. Modern life policies accelerate payment of the sum assured if the policyholder is diagnosed as terminally ill with a life expectancy of 12 months or less. Some older policies do not include this benefit, or restrict it to the final 12 months of the policy term.

Own occupation definition on income protection. Policies sold in the 1990s and early 2000s often used "suited occupation" definitions that allow the insurer to cease benefit when the claimant is capable of any work suitable to their training — regardless of their previous occupation. Modern own occupation definitions are significantly more generous. If you hold an older income protection policy, check the definition carefully.

Trust Registration and Compliance

The HMRC Trust Registration Service (TRS) was extended to non-taxable UK express trusts under the Fifth Money Laundering Directive; the TRS opened to such trusts in September 2021, with a registration deadline of 1 September 2022 for trusts already in existence (trusts created after that date generally have 90 days to register). Most life policies written under discretionary or other express trusts must now be registered on the TRS.

Failure to register is technically a non-compliance issue and may attract penalties. However, awareness of the requirement among policyholders remains low, and many trusts written in the late 2000s and 2010s have not been registered.

If you hold a life policy written in a personal trust (as opposed to an employer group life master trust, which is not typically held under an individual express trust), check whether registration has been completed. If you are uncertain, your financial adviser or solicitor can clarify.

Policy Laddering: A More Sophisticated Approach

Rather than holding a single large protection policy, some individuals benefit from policy laddering — holding multiple policies with different terms running concurrently. For example:

• A 10-year level term policy providing £500,000 (covering the highest-risk decade for a young family)
• A 25-year term policy providing £300,000 (covering the mortgage and school-fee period)
• A whole of life policy of £200,000 (covering IHT liability on the permanent estate)

The combined sum assured in the first 10 years is £1,000,000. After year 10, it reduces to £500,000. After year 25, the term policies expire and only the whole of life remains.

Policy laddering reduces total cost because the short-term policies are cheap (lower age, shorter term), and the permanent need is addressed only with the whole of life element. A review should assess whether an existing single policy could be redesigned as a ladder — replacing at good health, before any conditions arise.

Switching Insurers: Timing Matters

A common error in protection policy reviews is assuming that because you no longer use a particular insurer's products, you should move your existing policies to another provider. Switching a protection policy subjects you to fresh underwriting at your current health. If your health has changed materially since the original policy was written, you may face loadings, exclusions, or decline.

The appropriate time to consider switching is:

• When your health is the same or better than at original underwriting
• When the definition improvement available under a new policy genuinely justifies the underwriting risk
• When the existing insurer has applied a significant premium increase under a reviewable policy, and competing quotes are substantially better on guaranteed terms

Never lapse an existing policy until replacement cover has been confirmed, underwritten, and in force.

How Global Investments Can Help

Global Investments conducts comprehensive protection reviews as part of its financial planning services for HNW individuals. We examine existing policies against current needs, definitions, trust structures, and nomination records — identifying gaps, redundancies, and structuring improvements.

If you have not reviewed your protection arrangements in the past three to five years, or if you have experienced significant life events since your policies were last assessed, speak with one of our advisers. We do not provide regulated advice directly but work alongside specialist protection advisers and solicitors who can conduct a full audit.

This guide is for general educational purposes and does not constitute regulated financial or legal advice. Policy terms, tax treatment, and HMRC trust registration requirements are subject to change. Always seek professional advice tailored to your individual circumstances before amending or replacing existing insurance policies.