More than 10 million people could have the wrong insurance cover as a result of not updating their policy after changes to their lifestyle, according to research from Barclays.
Barclays is urging Brits to use the New Year as a good excuse to sort out their finances, starting with potentially out-of-date insurance
policies which have not been updated following life-changing events such as a new job, buying a house, or having a child.
Such lifestyle changes can render cover such as life insurance
, income protection, or critical illness insurance
unsuitable, Barclays warns, and as many as 42 per cent of Britons could be putting their financial security at risk by not updating their cover to reflect the changes in their lives.
More than half of Brits never think about updating their policies, the research revealed, leaving themselves open to having insufficient cover for them and their families if they had to make a claim.
"When you buy a protection policy this should not be the end of the matter." advises David Stuart, director of advice and products at Barclays
Financial Planning. After life-changing events, "It is crucial that people think about updating any cover, or switching to different types of products.
"It's a worrying statistic that over 10 million people could have the wrong cover when they think they are protected. Perhaps part of the problem is that people aren't often fully aware of what need and what sum their protection products cover in the first place, especially when they buy without advice."
Almost 40 per cent of people who have taken out protection policies have done so without seeking professional advice, while 13 per cent did not know whether or not they had received any advice.
Mr Stuart said that this could be largely due to the fact that 20 per cent of people do not know how much their life should be insured for, and nearly half of respondents could not say why they took out the protection cover in the first place, or only did so because they thought they should. Nearly 70 per cent of policy holders do not know how much they are in insured for or what they would receive if they made a claim.
"Our research seems to show a big gap in peoples' understanding of their cover, which could create a false sense of security for thinking they have taken care of protecting their family and finances, when the reality if they made a claim could be quite different." Mr Stuart added.
"At the beginning of a new year people often take the time to look at their finances, which is a great opportunity to find out if your existing protection cover continues to be right for your changing needs. The cost of updating an existing policy can be minimal so people shouldn't automatically think that their premiums might shoot up. We urge people to seek professional advice, as having the wrong kind of protection can create a false sense of security that's often realised too late."
Get a Barclays life insurance
Compare critical illness insurance
© Fair Investment