What are the risks of switching term insurance policies?

Hi anon,

Typically there isn't a waiting period for death/TPD coverage, so if you decide to change an exisiting term/TPD policy to a cheaper one (otherwise, there really isn't an reason to), the new policy will cover you immediately. However, you must still be in good health to switch. There is no point switching if you'll get a loading that brings your premiums back up again.

However, if there are CI elements inside your policy such as a CI premium waiver, there will typically be a 90 day waiting period and you won't be able to enjoy the feature of this rider on the new plan in this case.

The definition of death has been the same all this while, and TPD definition is quite standard as well (barring minor technicalities), so on that end there should be no issues.​​​

There are some factors you need to take into consideration if you are looking to switch policies.

1. Premium. Is the premium lower for the new proposed policy for the same benefits? If not, why the need to switch?

2. Are there any changes to your health between the time when your current policy is in force and now? If there are new medical conditions, it won't be a good idea to switch as underwriters may not deem your new application favourably. Extra premium or exclusion may be imposed.

Generally, death and TPD definitions are quite standard across the board, unless you have a funky TPD rider that is not the norm. You can request for a copy of the proposed plan's exclusion list to compare against your current one to be sure.

If there is no good reason to switch, best to keep things as they are.