Protecting Your Cover

Purpose of this guide

Protection policies such as life insurance, critical illness cover and income protection are designed to provide financial security when it matters most. This guide explains what may happen after a missed payment, how arrears and lapse differ, how reinstatement may work, and why reviewing your cover can be a better first step than simply cancelling it.

Why maintaining your cover matters

Protection policies are normally underwritten using your age, health, lifestyle and circumstances when you apply. If cover ends and you apply again later, the replacement may cost more, include exclusions, or be unavailable on the same basis. Existing cover remains subject to its own terms and conditions.

Affordability matters too. If the arrangement is no longer sustainable, MMPE can help you understand the available choices and the consequences before you decide what to do.

What happens if you miss a payment

A missed payment does not always end cover immediately. Many policies allow a grace period, often around 30 days, but the period and the treatment of cover vary by insurer, policy type and policy wording.

During any grace period, cover may continue in accordance with the policy terms. If a claim arises, the insurer may require outstanding premiums to be paid, deduct them from a benefit, or follow another process set out in the policy conditions.

Arrears and lapse: the difference

Reinstating a policy

Reinstatement means restoring a policy that has lapsed. It is not automatic. The insurer must agree and will apply the policy conditions and its current process. Missed premiums may need to be brought up to date and the insurer may request updated information, a declaration of health or further underwriting.

Cover should not be treated as restored until the insurer confirms acceptance and the effective date in writing.

Timing can affect the outcome

• A prompt request may be dealt with under a simpler reinstatement process.
• If more time has passed, new health information or underwriting may be required.
• The insurer may change the price or terms, apply exclusions, postpone a decision or decline reinstatement.

Reviewing your cover level and premium

If the cost of protection is becoming difficult to maintain, cancelling may not be the only option. Depending on the insurer and policy, it may be possible to review the amount of cover, the policy structure, selected benefits or other features so the arrangement better reflects your current needs and budget.

This can be helpful where household commitments have changed, the original level of cover is no longer required, or a reviewable, age-related or index-linked premium has increased. Not every policy allows changes, and reducing cover or benefits may be permanent. An amendment may require underwriting or affect the protection available at claim.

Many policies use guaranteed premiums that do not rise simply because you get older or your health changes after the policy starts. Other policies have reviewable, age-related or index-linked premiums that can increase under their terms. New replacement cover may also cost more because a fresh application is assessed using your age, health and circumstances at that time.

Before making a change, MMPE recommends discussing your current needs, priorities and affordability. Our review can identify which benefits remain important, where there may be duplication or a shortfall, and whether reducing or restructuring cover may be more appropriate than losing it altogether.

A review may consider

• the purpose of each policy and whether that need still exists;
• the amount and term required for mortgages, debts, income replacement and family commitments;
• whether premiums are guaranteed, reviewable, age-related or linked to increasing cover;
• which benefits or options can be amended under the existing terms;
• the effect of any reduction on the financial protection available;
• whether a change would require underwriting or affect existing terms; and
• whether retaining a smaller but meaningful level of cover is preferable to cancellation.

Financial difficulty and additional support

If you are experiencing financial difficulty, illness, bereavement, unemployment or another significant life event, please tell us. We will handle the conversation sensitively and consider whether communication or support should be adapted to your needs. Available support varies according to the insurer, product, policy terms and circumstances.

How MMPE can help

• confirm whether the policy is active, in arrears, cancelled or lapsed;
• contact the insurer to establish payment requirements and deadlines;
• ask whether temporary support or an alternative payment arrangement is available;
• review the level, term or structure of cover where changes are available and suitable;
• help with a reinstatement request and information required by the insurer;
• consider alternatives where the original policy cannot be maintained; and
• explain the risks, limitations and trade-offs before you decide.

Before cancelling your policy

Please speak to MMPE before cancelling a policy or stopping a Direct Debit. Cancelling may end valuable cover, and a replacement may not offer the same price, benefits, exclusions or acceptance terms. Where appropriate, our review can consider affordability, current needs, existing benefits, likely insurability and whether a wider Sustainability & Risk Review would be helpful.

What to do next

• Contact us as soon as a payment may be missed or the premium becomes difficult to maintain.
• Have your policy number and details of any missed payments available.
• Tell us about relevant changes in health, employment, finances or circumstances.
• Do not cancel the policy or stop a Direct Debit without understanding the consequences.
• Ask the insurer to confirm the policy status and any reinstatement in writing.

Glossary

• Grace period — a period after a missed payment during which cover may continue under the policy terms.
• Arrears — one or more premiums that remain unpaid.
• Lapse — where a policy has ended and cover is no longer in force.
• Reinstatement — restoring a lapsed policy, with the insurer's agreement and subject to its conditions.
• Guaranteed premiums — premiums that do not rise simply because you get older or your health changes after the policy starts.
• Reviewable premiums — premiums the insurer can increase at set review points under the policy terms.
• Index-linked cover — cover (and usually the premium) that increases in line with a measure such as inflation.
• Underwriting — the insurer's assessment of your age, health, lifestyle and circumstances when deciding terms.

Important information

This guide provides general information only and is not a personal recommendation. Policy conditions, premium structures, claims treatment, cancellation rules and reinstatement requirements vary. Your policy documents and the insurer's written confirmation take precedence. Nothing here is a recommendation to retain, alter, replace or cancel a policy. Please obtain personalised advice before making a decision.

This guide is for informational purposes only and was accurate at the date of publication. Please seek personalised advice before making financial decisions.