Switching life insurance for cashback?

danlightbulb

Hi all,

Is there a reason I shouldn't switch my life insurance regularly to get cashback from sites like quidco?

I currently have a level term policy for £100k with LV costing me £6.95 per month. Not sure what term I originally took out, or how long I have left.

I could switch to one of many providers, but for example Direct Line would cost me £6.86 per month and I'd get £70 cashback. I can play about with the term and the amount of cover to get the cost down, the above is for a 10 year term and £85k cover.

Is there any reason I can't just keep changing providers once the cashback is paid out, say every 6 months or so, and keep bagging it?

Thanks

Quentin

No reason.

(Lots do it!)

HappyHarry

danlightbulb wrote: »

Hi all,

Is there a reason I shouldn't switch my life insurance regularly to get cashback from sites like quidco?

I currently have a level term policy for £100k with LV costing me £6.95 per month. Not sure what term I originally took out, or how long I have left.

I could switch to one of many providers, but for example Direct Line would cost me £6.86 per month and I'd get £70 cashback. I can play about with the term and the amount of cover to get the cost down, the above is for a 10 year term and £85k cover.

Is there any reason I can't just keep changing providers once the cashback is paid out, say every 6 months or so, and keep bagging it?

Thanks

Your age and health will dictate that any identical new policy will most likely be more expensive than the existing one.

The term and cover are really important. You say Direct Line will offer you £85,000 on a ten year term. This is £15,000 less cover than you have now. How long is the term on your current policy? Is it more than ten years? If so, you would be changing your current policy for shorter term policy that pays out less. That wouldn't sound good.

It might be a good idea to go back and think about why you have life assurance in the first place. If you have a family that you are protecting, then it is important to understand what benefit they would get in the event of your death, and would it be sufficient for them to manage on financially if they did not have the benefit of your income?

No reason.

(Lots do it!)

No they don't!

Life assurance is not something that people would regularly switch, as they do house insurance and car insurance. As health deteriorates, a new policy would get more and more expensive. However, an existing policy with guaranteed premiums would stay the same price throughout it's term.

Quentin

HappyHarry wrote: »

No they don't!

Life assurance is not something that people would regularly switch.....

You do it to get the cashback not the cover! (The cashback paid means you make a profit - the cashback being higher than the premiums paid!)

Weighty1

Quentin wrote: »

You do it to get the cashback not the cover! (The cashback paid means you make a profit - the cashback being higher than the premiums paid!)

I still doubt that "lots do it" otherwise the insurers would start make a loss and would simply pull their insurance products from the market.

dunstonh

Is there a reason I shouldn't switch my life insurance regularly to get cashback from sites like quidco?

Yes and no. If you can improve on the cost and maintain quality then it makes sense to do it.

However, if you are compromising quality and terms then you should not do it.

I can play about with the term and the amount of cover to get the cost down, the above is for a 10 year term and £85k cover.

And what happens if your financial need is for life assurance for 20 years. This would see your life cover run out in 10 years and need you to replace it. You will be 10 years older (so more expensive) and your health may not be as good. Indeed, you may not even be able to get life cover.

So, playing around with the term is not a good idea.

Quentin

Weighty1 wrote: »

I still doubt that "lots do it" otherwise the insurers would start make a loss and would simply pull their insurance products from the market.

This is MSE.


Insurers often use the cashback sites and often pay more cashback than they get back in premium! (And must make a "loss" on the deal!?????)


This has gone on for years in the house insurance/car insurance sector, and now life insurance - where they give gifts (eg £30 M+S voucher) as well as the cashback which often shows a profit over the premiums paid.


As soon as the cashback hits your account the trick is to cancel the life policy, as it was the cashback that was wanted, not the cover!


(Also see the MSE pet insurance offer of a £50 M+S gift card - paid out after just 75 days - no pet required!!)

danlightbulb

Thanks for the replies everyone.

I can see now I have confused two slightly different requirements. First, my actual life insurance that I intend to rely on over the long term, and second the frequent cashback grab that I can get from playing off providers.

The first I should take seriously and properly evaluate my requirements.

The second is simply a cost vs payback game that can be treated independently from the actual life cover, and applies to lots of products not just life cover.

I will do further research! Thanks again.

danlightbulb

Oh one final question. Is there a consequence (eg on credit file or equivalent) of regularly buying insurance products then cancelling them after a short time?

Quentin

No.


(You aren't defaulting/asking for credit etc)

rs65

HappyHarry wrote: »

As health deteriorates, a new policy would get more and more expensive. However, an existing policy with guaranteed premiums would stay the same price throughout it's term.

If it gets to that stage, you don't switch and stick with what you've got.