The need to keep up to date with what cover you have purchased and how much you need now has been highlighted by a new survey from a major British insurer. When buying life insurance many people fail to take in to account the need to renew and amend the policy to fit with ever-changing life circumstances, which can leave you with a large financial hole in the event of a tragedy.

Life stage events

“Life stage events” as they are called in the insurance industry are those points in a persons' life, which will massively effect their financial and security status. The most common of these often include divorce, the birth of a child, marriage, buying a new home or moving house, a new job, retirement and a family bereavement.

These events can very often affect the suitability of your life insurance or critical illness cover but according to the research conducted by Barclays Financial Planning, 42% of people with one or more protection policies has had a life stage event since they signed the deal and hasn't reviewed the policy to check if it still offers all the protection they need for the whole family.

David Stuart, from Barclays commented that:

“When you buy a protection policy this should not be the end of the matter. It is crucial that people think about updating any cover, or switching to different types of products if, for instance, they have a child, get married or buy a house. It's a worrying statistic that over 10 million people could have the wrong cover when they think they are protected.”

Expert Advice

The research conducted by Barclay's revealed some worrying holes in people's knowledge of the insurance market, with half of those surveyed admitting that they had received no expert advice before buying cover and even worse, over 10% were even unsure whether they had received advice or not.

“Perhaps part of the problem is that people aren't often fully aware of what need and what sum their protection products cover in the first place, especially when they buy without advice.” Added Stuart, the insurer's Director of Advice and Products.

The bank urged people to take advantage of the new year to review their finances and make sure that they have all their insurance cover in order. They added that people should not be afraid to ask for specialist advice rather than getting help from unqualified friends and family.

“At the beginning of a new year people often take the time to look at their finances, which is a great opportunity to find out if your existing protection cover continues to be right for your changing needs. The cost of updating an existing policy can be minimal so people shouldn't automatically think that their premiums might shoot up. We urge people to seek professional advice, as having the wrong kind of protection can create a false sense of security that's often realised too late,” concluded Stuart.