Told to cancel your old policy for a new one? What you could lose
Sometimes switching policies is right. Often, though, it costs: lost surrender value, new costs from the start, an older age, new health exclusions. What to ask for in writing, the safe order of steps, and the alternatives.
In short
Replacing a life policy can cost you: lost surrender value, new initial costs, an older age, new health exclusions and waiting periods.
- Ask for a written comparison of old and new, with numbers.
- Do not cancel the old one before the new one is accepted and in force; the new one has its 30 days of withdrawal.
- If the reason is cost, first see whether you can change the old policy instead of cancelling it.
“Your policy is old, take out a new one.” He or she may be right. But the switch may benefit the person proposing it more than you. The law requires the advisor to act in your best interests and every proposal to be consistent with your needs (Articles 394Γ and 394ΣΤ). A replacement is a proposal like any other: it must be possible to explain it in writing, with numbers.
What you could lose
- Surrender value. In the first years of a life policy the costs weigh on the start, and if you stop it little or nothing may come back.
- Costs from the start. A new policy starts again with its own initial costs.
- Age. You are older than when you took out the old one; the premium for the same cover usually rises.
- Health. You will declare your health again. Anything that has appeared since may be excluded, make the cover dearer or lead to a refusal.
- Waiting periods and exclusions from the start. Many terms that had already “run out” on the old policy start again.
- Terms no longer available. An old policy may have guarantees or options that new ones do not offer.
Before you decide, see what stopping a policy in its first years means with the “Early surrender cost” tool. If your policy had tax relief, ask in writing whether stopping it has tax consequences.
When switching can make sense
- Your needs have changed substantially (children, a loan, a business) and the old policy cannot be adjusted.
- The old one is expensive for the cover it gives, and the comparison shows it with numbers.
- The new cover is accepted without new exclusions for what matters to you.
Ask for a written comparison
| For each policy | Old | New |
|---|---|---|
| Sums insured and what is covered | … | … |
| Premium today and how it changes | … | … |
| Exclusions and waiting periods | … | … |
| What you get if you stop (today and in 5 years) | … | … |
| Total costs | … | … |
The safe order
- Do not cancel anything yet. The old policy stays in force until you are sure of the new one.
- Apply for the new one. Wait until it is accepted and in force. Read whether exclusions or a loading were added.
- Use the 30 days. If something is not as you were told, you can withdraw from the new one, and the old one is still there.
- Only then stop the old one, in writing. Ask for written confirmation and the amount refunded to you, and tell your bank about the standing orders.
Alternatives to cancelling
If the reason is cost, many policies let you lower the sum insured, make the policy paid-up, take a payment break or a policy loan. See how to change your policy properly and what happens if you stop paying.
Template: request for a written comparison
To: [advisor’s name]
Date: [date]
Subject: Proposal to replace policy no. [number]
Before I decide whether to replace the above policy, please give me in writing:
1. A comparison of the old and the new: sums insured, premiums, exclusions, waiting periods, total costs.
2. What I would get if I stopped the old one today, and what I would get if I kept it.
3. Why the switch is consistent with my needs (Article 394ΣΤ, Law 38(I)/2016).
[Full name]
[Phone, e-mail]
Questions worth asking
- What do I gain from the switch, in numbers?
- Will I need a new health declaration? What happens if an exclusion is added?
- Can I get the same result by changing the old policy instead of cancelling it?
- What remuneration do you receive for the new policy?
What you can do now
- Find the latest annual statement of the old policy.
- Ask the old policy’s insurer in writing for today’s surrender value.
- Ask for the written comparison before signing anything.
- Do not cancel the old one before the new one is in force.
General information, not legal advice. For your own case the text of the law and the terms of your policy apply; if something is unclear, ask for a written answer.
Every policy has its own terms. What we write here is general information, not advice; for your own case, what your policy says applies, and it is worth confirming it in writing with your insurer.
Read also: The advisor must ask you first · How do I change the beneficiary, lower the premium or cancel my policy properly? · If I stop paying, do I lose everything?
Were you offered a switch?
Bring both, the old policy and the proposal, to Giannis Farazis, life-insurance advisor (ICCS reg. no. 7854), for a second opinion before you cancel anything, with no obligation.
Phone: +357 97 840941 · E-mail: giannis@avrastro.com · Appointments: farazisgiannis.com/en/book
AVRASTRO is not an insurer.
Part of the series “Your rights as a policyholder”. Start with the 30-day right of withdrawal.
Sources
- CyLaw — Insurance and Reinsurance Business and Other Related Issues Law of 2016, 38(I)/2016 (Articles 225, 227 and 228; Greek text)
- Insurance Companies Control Service — Insurance and Reinsurance Business and Other Related Issues (Amendment) Law of 2019, 38(I)/2019: new Part VIII on insurance distribution (Greek text)
- EUR-Lex — Directive (EU) 2016/97 on insurance distribution (IDD)
