Changing your policy

This option allows your client to increase their level of cover without providing further medical evidence. Changing Your Policy was previously known as Guaranteed Insurability Option (except for Whole of Life Protection Plan which still refers to Guaranteed Insurability Option).

Your client can change their level of cover as follows:

For Life and/or Critical Illness Cover and Family and Personal Income Plans

  • A mortgage increase due to a house move or major improvements to an existing property
  • A salary increase due to a new job or promotion (not applicable to Life or Critical Illness Cover policies if taken out before 23rd May 2010)
  • Marriage or entry into a registered civil partnership
  • The birth or adoption of a child.

For Income Protection Benefit 

  • A mortgage increase due to a house move or major improvements to an existing property
  • A salary increase due to a new job or promotion
  • Every third policy anniversary.

For Whole of Life Protection Plan

  • A mortgage increase due to a house move or major improvements to an existing property
  • Marriage or entry into a registered civil partnership
  • The birth or adoption of a child
  • Divorce or dissolution of a registered civil partnership.

For IHT

  • An increase in the expected IHT liability
  • An increase in the IHT rate
  • A reduction in the IHT tax rate bands, exemptions or reliefs.

For Business Protection

  • Increase in a business loan
  • The value of a key person to the business increases
  • A working partner's or director's interest in the business increases in value.

For all plans

Your client can only change their policy up to 3 times in total, although only once for marriage/entering into a registered civil partnership or divorce/dissolution. And only once for IHT on a Whole of Life Protection Plan.

Your client must change their policy within 6 months of the event.

Amount of increase allowed: 

CYP
PLAN TYPE PLANS TAKEN OUT AFTER 23RD MAY 2010 PLANS TAKEN OUT BEFORE 23RD MAY 2010
 Life and/or CIC

 The lesser of:

  • £150,000
  • 50% of the amount of cover
  • The amount of the mortgage increase (if applicable)
  • The percentage increase in salary

The maximum overall total allowed for all increases is £200,000.

The lesser of:

  • £50,000
  • One third of the amount of cover
  • The amount of the mortgage increase (if applicable)

The maximum overall total allowed for all increases is £150,000.

 All FPIP's

 The lesser of:

  • £1,050 per month
    The percentage increase in monthly salary
  • 10% of the original benefit

The maximum overall total allowed for all increases is £1,400 per month or 50% of the original benefit amount.

 The lesser of:

  • £350 per month
    The percentage increase in monthly salary
  • 10% of the original benefit

The maximum overall total increase permitted is £1,050 per month or 30% of the original benefit amount.

For Income Protection Benefit

The lesser of:

  • £10,000 p/a or £833.33 per month
  • 50% of the monthly benefit

The maximum amount cannot exceed the maximum benefit level.

For Business Protection 

The lesser of:

  • £150,000
  • The amount of the loan increase
  • The amount of the increase in the value of the employee, or increase in the ownership interest (whichever applies)

The maximum overall total for all increases permitted is £250,000.

For Whole of Life Protection

If this used for family protection, the lesser of:

  • One third of the original amount of cover
  • The amount the increase in the mortgage
  • £50,000

The maximum overall total for all increases permitted is £150,000.

If this is used for IHT purposes, the lesser of:

  • £100,000
  • The amount of increase in IHT liability
  • 50% of the original amount of cover.

If this is used for business protection, the lesser of 

  • £100,000 or if less, then the increase in the loan
  • One third of the original amount of cover

The maximum total of all increases permitted is £250,0000.

For your clients to change their policy, the following will apply:

  • The original policy must be started before your client's 45th birthday (older life on a joint life policy)
  • The policy must be accepted on standard terms
  • The option must be exercised before the life insured's 55th birthday (50th birthday for IPB and Whole of Life Protection Plans if this is for family or business protection and for Life and/or Critical Illness Cover plans taken out before 23rd May 2010. If the Whole of Life Protection Plan is for IHT purposes, then it will be their 65th birthday)
  • When the option is exercised, a new policy is issued for the additional amount on the terms that apply at the time. The original policy will also continue
  • Your client can't change their policy if they are suffering a disability or if the policy is subject to a terminal illness, critical illness or waiver claim
  • For IPB, your client can't change their policy if they are incapacitated or have made a valid claim
  • When changing their policy, no other products features can be changed. The new policy end date can't be later than the original policy and all deferred periods (if applicable) have to remain the same.