Your Existing Risk Insurance Policy Might Be Worth More Than You Think

Every year, we meet South Africans who are considering cancelling a life, disability or severe illness policy they've held for years, often to "shop around" for something cheaper, or because a new advisor or call centre agent has offered them something that looks better on paper. Here we unpack the reasons why replacing a policy can affect you. It's a completely understandable instinct. But it's also one of the areas where good independent advice matters most, because the true value of a risk policy isn't always visible in the premium alone.

An older policy is often a more valuable policy

This sounds counterintuitive, surely a newer policy, with newer product features, is the better option?

The answer is not necessarily.   Let me explain, the moment you took out your existing cover a few years ago, you locked in your age, your health status and your risk profile at that point in time. Every year that passes without a claim is a year your insurer has effectively priced you as you were, not as you are now.

Older policies also frequently sit outside exclusion periods that apply to new cover such as the standard suicide clause in the first two years of a life policy and may carry original terms, guaranteed insurability options, or legacy benefit structures that newer product ranges no longer offer.

Replacing a long-held policy effectively, RESETS much of this. You start a new underwriting process, a new set of waiting periods, and in some cases lose benefits that simply aren't available on current product ranges. The Financial Sector Conduct Authority (FSCA) treats this as serious enough that any advisor recommending you replace one policy with another is legally required to give you a full, documented comparison of what you're giving up, not just what you're gaining, precisely because the cost of replacement is so often underestimated.

We find that in most times, policyholders DON’T ask for this information, which ultimately can cost a lot more later on…

Your health today is not your health when you first applied

This is the theme we see catch people out most often. When you first took out cover, you went through underwriting (a process where the insurer assessed your health, lifestyle and medical history to decide your premium and terms). If you were healthy at the time, you likely secured standard rates with no exclusions.

Health changes with age. A new diagnosis, a change in blood pressure or cholesterol, a family medical history that becomes more relevant, or simply the normal effects of getting older, can all affect how an insurer assesses you today.

The caveat is If you cancel an existing policy and apply for new cover later in life, you go through underwriting again AND this time, insurers may respond with a different outcome, such as a loaded premium (a higher price to reflect added risk), a specific exclusion for a condition you now have, or in some cases, a decline altogether.

Your current policy, by contrast, was underwritten once. In most cases, insurers cannot simply re-underwrite you or increase your risk rating years later just because your health has changed.  The terms you were offered at the start are the terms you keep, provided the policy stays in force and premiums are paid. That protection quietly becomes more valuable every year your health profile shifts, even slightly. It is genuinely one of the most underrated aspects of long-term risk cover.

Why independent advice matters more here than almost anywhere else

This is where the type of advisor you work with has a direct, measurable impact on the advice you receive. An advisor who is tied to a single insurer by either being contracted or formally employed is structurally limited.  I too was tied at an earlier stage in my career, but independence means that the advice is unbiased, client centric and aimed at bettering the life of the client in all aspects. 

An independent advisor operates differently. As a distribution partner to multiple insurers rather than an employee of one, an independent advisor can genuinely compare your existing policy's full terms, exclusions, waiting periods and pricing against the entire market — including the honest option of recommending you keep exactly what you already have.

Regulation in South Africa formally recognizes this distinction: FAIS requires any advisor recommending a policy replacement to prove, in writing, that the replacement is genuinely in your interest, accounting for lost benefits and new exclusions, not just a lower premium quote. An advisor with access to the whole market is far better positioned to make — and prove — that case honestly, because they have nothing to gain from the switch itself.

The quote you were shown is not the cover you'll actually get

There's a step in this process that often gets skipped in the excitement of a lower premium: the difference between a quotation and a final offer of cover.

A quotation is exactly what the word says. According to the law, it is an offer to participate and an estimate, based on the information provided at that point, before the insurer's underwriting team has assessed your full medical history, requested any tests, or reviewed your complete disclosure.

It is not a contractual promise of terms. The final offer only exists once underwriting is complete and that process can, and often does, change the picture. Depending on what turns up in your medical history, blood tests or lifestyle disclosures, the insurer's underwriters may come back with a loaded premium, one or more exclusions on specific conditions, a reduced benefit amount, or in some cases, decline a particular benefit altogether. None of that is visible in the number you were quoted at the start.

This is precisely why the quote itself should never be the basis for a decision to replace existing cover. A new policy that looks meaningfully cheaper on the initial quotation can end up costing more, covering less, or leaving out the exact condition you'd most want protected once full underwriting is complete. And because replacing a policy means walking away from the terms you already hold, by the time the final underwritten offer comes back, you may have already given up cover that can't simply be reinstated on the same terms.

A responsible advisor will tell you upfront that any quote is provisional, walk you through what full underwriting could realistically change based on your specific health profile, and — critically — not encourage you to cancel your existing policy until the new one's final terms are confirmed in writing. If an advisor is pushing you to replace cover based on a quotation alone, that's a conversation worth pausing.

Has your advisor shown you the full picture — not just the premium?

Two questions matter more than the price on the page, and both are frequently left unanswered:

What happens to my premium if my health changes after I take out this policy? 

On a properly underwritten policy, your premium and terms are generally fixed based on your health at the time you applied — a later diagnosis shouldn't retroactively change what you agreed to, provided you disclosed honestly upfront and keep paying your premiums. But not all products work this way. Some direct-to-consumer or simplified-issue policies defer most of the underwriting to claim stage instead of application stage — meaning very little is checked when you sign up, but the insurer investigates your full medical history at the point of claim. If something material wasn't disclosed, or looks different from what was assumed at application, that's exactly when a claim can be reduced or rejected — often at the worst possible moment for your family. Knowing which type of underwriting your policy uses is not a minor detail; it fundamentally changes how reliable that cover actually is.

What actually happens to my benefits if I need to claim? 

This is the question a quotation can never answer, and a fair advisor should walk you through it regardless of which product you choose: what's excluded, what waiting periods apply, whether the payout reduces or ends future cover, and how the insurer's claims-paid track record for that specific benefit type actually looks. South African insurance operates on a principle of utmost good faith — the responsibility sits with you to disclose fully, but it sits with your advisor to make sure you understand exactly what you're disclosing into, and what the consequences of getting it wrong could be.

An advisor who only walks you through the premium has told you the least important part of the story. The bigger picture — what changes your premium later, and what actually happens when you claim — is where real due diligence lives, and it's exactly where a tied advisor, focused on placing you into their own book of business, has the least incentive to slow down and explain the fine print.

The real question to ask before you replace anything

Before cancelling or replacing any existing risk policy, it's worth asking a few honest questions:

1. What underwriting terms do I currently hold, and would I qualify for the same terms today?

2. What would I lose — exclusions, waiting periods, guaranteed insurability options — by starting fresh?

3. Is the person advising me able to compare my existing policy against the whole market, or only their own products?

4. Is the recommendation being made in writing, with a clear comparison — as it's legally required to be?

5. Is the number I've been shown a final offer, or just a quotation still subject to underwriting?

6. Has my advisor explained what happens to my premium and my benefits at claim stage — not just what I'll pay each month?

   
   

A lower premium quote can look compelling in isolation. But risk cover is only valuable at the moment you need to claim on it — and an older policy, underwritten when you were younger and healthier, often protects you in ways a shiny new quote simply cannot replicate.

If you're considering switching, or simply haven't reviewed your existing cover in a while, we're happy to run an honest, whole-of-market comparison with you — including the option of confirming that what you already have is the right call.

Should you require guidance, or advice, reach out to us to schedule a consultation.

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Disclaimer: This article is intended for informational purposes only and does not constitute financial advice. Investment values may rise or fall, and past performance is not indicative of future results. Please consult a licensed financial advisor before making investment decisions.