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Paying too much for life insurance?

Life cover set up years ago may cost more than you need. When switching saves money, when it’s risky, and what to check before cancelling anything.

By Semih Kavaklioglu · Last updated 16 August 2026

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Unlike car or home cover, life insurance never sends a renewal letter — the direct debit just runs, sometimes for decades. That’s exactly why it’s worth a deliberate look every few years: it’s the household’s least-reviewed significant outgoing.

When a switch tends to win

  • The policy was bought years ago through a bank or with heavy commission baked in.
  • You’re in the same or better health than when you bought it (and still a non-smoker).
  • Your need has changed shape — e.g. the mortgage is smaller, so less cover or decreasing term would do the job.
  • You have several old overlapping policies that one clean policy could replace.

When staying wins — clearly

  • Any meaningful health change since purchase. Your current insurer covers it at old terms; a new one prices or excludes it.
  • You’re older enough that the age effect outweighs the market effect — quotes settle this quickly.
  • The policy carries features that are expensive now (guaranteed insurability, waiver of premium, older-style critical illness definitions).
Watch out. The absolute rule: keep the old policy running until the new one has been underwritten, accepted and started. Cancel first and a delay or exclusion in underwriting leaves your family uncovered — the one outcome the whole product exists to prevent.

A 20-minute review, every few years

  1. 1
    Find the paperworkSum assured, term end date, monthly premium, policy type (level/decreasing), any riders. This alone surprises most households.
  2. 2
    Re-ask the question it answersWhat would need paying off, and for how long, if the worst happened? Compare that to what you’re actually insuring.
  3. 3
    Quote the gapGet fresh quotes for the cover you actually need. A regulated broker costs nothing extra and can search whole-of-market.
  4. 4
    Switch in the right orderNew policy live first, then cancel. Update the beneficiary/trust details while you’re there.
Good to know. This is general information, not personalised financial advice. Life cover interacts with health, tax and trusts — a regulated adviser is worth it for anything non-trivial.

In short

Life insurance has no renewal nudge, so put one in yourself every few years. Healthy and over-insured: quote and probably save. Health changed: your existing policy is the keeper. Either way — new cover live before old cover dies.

Frequently asked questions

Why would a new policy be cheaper if I’m older now?

Term life insurance has become more competitively priced over the years, and many older policies were sold with commissions or through banks at above-market rates. For someone still in good health, a fresh quote can undercut an old premium despite the added years — the only way to know is to quote.

When is switching a bad idea?

If your health has changed since you bought the policy — new diagnoses, raised BMI, smoking — a new insurer prices or excludes those, while your existing policy already covers them at the old terms. In that case the ‘expensive’ old policy is usually the bargain.

Could I need less cover instead?

Often. Cover bought when the mortgage was large and the children small may exceed what’s needed once the balance has shrunk. Many insurers allow a reduction in sum assured (and premium) on the existing policy — no switch required.

What about decreasing vs level term?

If the policy’s job is covering a repayment mortgage, decreasing term cover (which shrinks with the balance) is typically cheaper than level cover doing the same job. Worth checking what shape you actually have.

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Sources & last checked

Last checked against official sources: 16 August 2026.