Introduction
Many internationally mobile clients carry protection policies that were taken out years — sometimes decades — ago. The life circumstances around those policies have often changed substantially: income is higher or lower, dependants have arrived or left, property has been bought and sold, businesses have grown, and the clients themselves may now be living in a different country.
A policy that was right at inception is not automatically right today. But reviewing and changing protection policies involves risks that are easily underestimated. This guide explains when to review, what the risks of switching are, and how to manage the process correctly.
Triggers for a Protection Review
A protection review should be triggered by any of the following:
Major life events
- Birth of a child or other new financial dependant
- Marriage, civil partnership, or cohabitation
- Divorce or separation (particularly where the ex-spouse was a nominated beneficiary)
- Death of a nominated beneficiary
- Retirement or semi-retirement (significant income change)
Financial changes
- Significant increase in income — the sum assured may now be inadequate relative to current earnings
- Significant decrease in income — premiums may be unaffordable; benefit level should be adjusted
- New business loan or personal guarantee — business loan protection may be required
- Repayment of a major mortgage or debt — life cover linked to that debt may be redundant
- Major increase in estate value — IHT exposure may have grown beyond the sum assured of existing whole-of-life or trust policies
Relocation
- Moving to a new country — the existing policy should be checked for residency clauses and continued validity; the new country's healthcare infrastructure and tax treatment affect what cover is needed
- Moving from a country with high medical costs back to a country with state healthcare — CI and income protection needs may change
Business changes
- New business partner or shareholder — shareholder protection and key person cover may be required
- Business growth — key person cover sum assured may be inadequate
- Business sold or dissolved — business protection policies may be redundant
Time elapsed
- At minimum every 3–5 years, even without a specific trigger — premiums may have become uncompetitive; providers may offer better terms; coverage may have improved in the market
How to Switch Providers: The Correct Process
Step 1: Obtain a current review of existing policies
Before considering a switch, understand exactly what you currently hold:
- The in-force sum assured and type of each policy
- The current surrender value (if applicable)
- Any exclusions, loadings, or special terms
- The policy's residency provisions
- Whether the policy is written in trust
- The nomination of beneficiaries
Step 2: Assess the need for change
Is the existing policy inadequate, or does it simply need updating? In some cases, the existing policy can be amended (sum assured increased, term extended, currency changed) without full replacement. This preserves the original underwriting terms — an important consideration if health has changed.
For policies with no amendment facility, a full replacement may be required.
Step 3: Apply for the replacement policy FIRST
This is the most critical step. Apply for the new policy and do not cancel the existing one until the new policy is confirmed in force.
The underwriting of the new policy may take days, weeks, or months. During this time, the existing policy remains the live protection. Only once the new insurer has confirmed:
- The application is approved
- The policy is on risk (not merely issued for signature)
- Any medical conditions are treated as disclosed (not excluded)
...should the existing policy be cancelled.
Step 4: Cancel the existing policy
Cancel in writing. Obtain written confirmation of the cancellation date. If the existing policy has a surrender value, the surrender process will be initiated at this point.
Portability Issues and Residency Clauses
UK policies taken out before relocating
UK domestic term life policies issued by standard UK insurers are generally portable in practice — they continue in force regardless of country of residence. However:
Notification requirement: many UK policies include a condition requiring the policyholder to notify the insurer of a material change in circumstances, including a change of address to a foreign country. Failure to notify can make the policy voidable (the insurer can choose to treat it as void from the date of the material change).
Actual portability: some UK term policies contain explicit geographic restrictions. These are more common in older policies, specialist policies, or employer-arranged group policies. Always check the policy conditions.
Group policies: group death-in-service schemes provided by a UK employer almost always cease on termination of UK employment. Moving abroad as part of a permanent relocation, rather than on an international assignment, typically terminates the group cover.
Reviewing an offshore policy
Isle of Man-regulated policies are designed to be internationally portable — this is one of their core design features. There are no residency restrictions on continuing an Isle of Man policy or making a claim from any country. Premium payments can be made from any bank account in any currency.
The only portability concern for Isle of Man policies relates to tax treatment: moving to a country that taxes life insurance differently from the country where the policy was originally taken out may affect the tax-efficiency of the policy going forward. This is a tax planning issue, not a policy validity issue.
Premium Comparison and Sum Assured Review Against Inflation
Premium comparison
Protection premiums are not fixed across the market — they vary significantly between providers for the same risk. A policy placed 10 years ago at what was then a competitive premium may now be significantly more expensive than the current market rate for the same cover.
This matters particularly for whole-of-life reviewable premium policies, where the insurer sets the premium at each review period. The reviewable premium should be compared against the current market rate for equivalent guaranteed-premium cover — in some cases, switching to a guaranteed-premium policy is cheaper in the long run despite a higher initial premium.
For term life and CI policies, an independent comparison across the current panel of international providers may identify meaningfully lower premiums for the same or better cover.
Sum assured vs inflation
A policy taken out with a £500,000 sum assured 15 years ago provides the same nominal payout today — but its real value has declined substantially. If the original purpose of the policy was to replace income (and salary has risen with inflation) or to cover a growing estate (which has grown with property and investment returns), the sum assured may be materially inadequate.
At minimum, sum assured should be reviewed against:
- Current income × replacement period (for income replacement policies)
- Current estate value × 40% (for IHT planning policies)
- Outstanding liabilities (for debt protection policies)
What Happens to Cash Value on Surrender
Unit-linked policies
For unit-linked or investment-linked protection plans (particularly international whole-of-life and some universal life products), the policy holds units in investment funds. The surrender value is the current market value of those units, less:
- Any surrender charge (typically on a sliding scale reducing to zero after a certain number of years)
- Any market value adjustment (MVA) applied by the insurer in adverse market conditions
- Any outstanding policy loan and accrued interest
Surrender value is not the same as the sum of premiums paid. In early years (when surrender charges apply), or after a period of poor investment performance, the surrender value can be substantially less than premiums paid.
Before surrendering: obtain a current surrender value quotation from the insurer. Compare it against the face value of continuing the policy. Consider whether a premium holiday (suspending premiums while preserving the policy in force) is available as an alternative to surrender.
With-profits policies
With-profits policies accumulate a "smoothed" value — the with-profits fund absorbs market volatility to provide more predictable returns. In adverse market conditions, the insurer may apply a Market Value Reduction (MVR) that reduces the surrender value below the illustrated smoothed value.
An MVR can reduce the surrender value by 10–20% or more. Policies should ideally not be surrendered when an MVR is in force. The insurer can provide current information on whether an MVR applies.
How Global Investments Can Help
We conduct protection reviews for internationally mobile clients — assessing existing policies, identifying gaps, identifying redundant cover, and recommending changes where appropriate. Reviews are carried out independently, without any obligation to switch providers.
If a switch is identified as beneficial, we manage the process — applying for the replacement policy, confirming it is on risk, and only then confirming cancellation of the existing cover.
Request a protection review to understand where your current policies stand.
This guide is for general information only. The decision to switch or retain a protection policy depends on individual health, financial circumstances, and existing policy terms. Always obtain independent advice before cancelling any existing policy.
Frequently Asked Questions
When should an expat review their existing protection policies?
Protection policies should be reviewed whenever there is a material life event: a significant change in income (up or down); a major property purchase or debt repayment; the birth of a child or other new dependant; a divorce or separation; relocation to a new country; a new business loan or guarantee; a significant change in health; the death of a nominated beneficiary; or when a substantial amount of time has passed since the policy was last reviewed (typically every 3–5 years at minimum). Reviews should also be triggered by significant changes in your estate value — if your estate has grown materially, your IHT liability may have outpaced the sum assured on your existing policy.
What is the new policy first rule when switching providers?
The 'new policy first' principle is the most important rule when switching protection providers. Always ensure the replacement policy is fully underwritten and in force before cancelling the existing policy. If you cancel first and are then declined by the new insurer — due to a health change since the original policy was taken out — you will be left with no cover. Even a short gap creates risk. The new policy should be confirmed in writing as on risk before the old policy is cancelled.
What residency clauses can make a UK policy invalid abroad?
Some UK life insurance policies contain clauses requiring the insured to remain resident in the UK (or certain specified countries) for the policy to remain valid, or for claims to be paid in full. If you move abroad without notifying the insurer, the policy may become voidable — the insurer can decline a claim on the basis of a material change in circumstances not disclosed. Standard UK term policies from major providers typically do not include residency clauses, but older policies, specialist policies, or group schemes may. Always check the policy conditions or ask the insurer directly before relocating.
What happens to cash value when a unit-linked or with-profits policy is surrendered?
For a unit-linked policy (such as some international whole-of-life or investment-linked protection plans), the surrender value is the current market value of the units held in the policy, less any surrender charges or market value adjustments (MVA) applied by the insurer. Unit values fluctuate with the underlying investment funds — surrender in a period of poor market performance may result in receiving significantly less than the premiums paid. For with-profits policies, a Market Value Reduction (MVR or MVA) can reduce the surrender value below the illustrated smoothed value in adverse market conditions. Check the surrender value at the time of review — not at inception — before deciding to switch.
Is there a non-disclosure risk when applying for a new policy to replace an existing one?
Yes. When applying for a new policy, you must declare your current health status — which may have changed since the original policy was taken out. A condition that developed after the original policy was placed (and which was therefore not declared at that time) must be disclosed on the new application. If the new insurer loads the premium or excludes the condition, you must decide whether to accept the new terms or retain the existing policy. This is the core risk of switching — you are giving up the protection of the original policy's underwriting terms.
This guide is for general information only and does not constitute financial or insurance advice. Policy terms, premium rates, and insurer eligibility criteria change — always verify current terms with a qualified independent adviser before taking out any policy.