Replacing life insurance in BC: what to check before cancelling

A lower premium is a reason to investigate a proposal. Before replacing an existing life insurance policy, ask what you gain, what you give up and how continuous coverage will be maintained.

A quote or submitted application does not establish that replacement coverage is in force. Keep the existing policy while the proposed change is reviewed and the new coverage’s status is confirmed.

Start with the policy you already own

Find the coverage amount, premium schedule, renewal dates, conversion provisions and any riders. If there are cash values, ask how a surrender or other change would affect them and whether there are tax implications.

Write down what prompted the review: a renewal increase, a changed family situation, a budget concern or uncertainty about the policy’s purpose. That gives the comparison a specific problem to address.

Compare the terms alongside the price

Ask for a written comparison using the same coverage amount and time horizon where possible. Identify any difference in guarantees, exclusions, riders or flexibility.

Replacement may involve fresh underwriting and different policy provisions. Ask specifically about any new contestability or suicide provisions and how they affect your situation. Do not assume that time elapsed under an old contract carries over.

There may also be ways to change the existing policy. Ask what the current insurer can offer before deciding that replacement is the appropriate next step.

Expect a documented explanation in British Columbia

The Insurance Council of BC says replacement must be assessed in the client’s interests. Its guidance calls for the required declaration and a written explanation of the advantages and disadvantages, addressing the client’s specific needs.

Read that explanation before signing. Ask for clarification of any point you could not comfortably explain to your partner. Keep a copy with both policy records.

Confirm when the new coverage is actually in force

Ask the insurer or advisor to confirm the effective date and whether any requirements remain, including payment, delivery, acceptance or updated information. Approval alone may leave steps to complete.

Only arrange a cancellation once the replacement has been confirmed in force and the transition has been reviewed. Get the cancellation instructions and timing in writing, along with confirmation of what happens to any existing values.

Set a date for the next review

Record the next renewal and any earlier conversion deadline. Keep the policy where it can be found and make sure the appropriate people know whom to contact.

A review may also conclude that the existing policy should stay. The result should connect to your family’s needs, which you can organize with our six-question family check-in.