Thousands of people in the UK greatly undervalue how insurance protects them. Often regarded as an unnecessary bill, many people in this country have yet to sort any cover to protect them in the event of: 

• Job loss 
• Poor health 
• Death

With the present (Dec 2023) cost-of-living crisis making monthly budgeting difficult for many, it's critical to maintain coverage and to cut spending elsewhere. Despite misconceptions about how frequently providers pay out, harsher times make insuring your family in the event of your death even more important. 

What to consider before cancelling your plan 

There could be a few compelling reasons for you to keep your protection policy. So, it may be worthwhile to reconsider before cancelling. 

Did you realise that getting new coverage at a later date may be more expensive? This is due to the fact that life insurance normally becomes more expensive as you become older. Also, your family's medical history may have changed between the time you took out your policy and today, which could affect the cost of new life insurance coverage. It's important to note that if your health has changed you may not be able to replace the coverage, this is termed as ‘uninsurable.’ 

If you cancel a policy, your family, partner, or household may be left without a financial safety net. Life insurance protects your family in the event of your death, some policies also pay out if you are diagnosed with a terminal illness and are anticipated to die within the next 12 months. 

If you died or were diagnosed with a critical illness while your insurance was active, you or your family could receive a lump payment or regular income. This money could help you stay financially solvent. So, think twice before clicking the 'cancel life insurance' button. 

Are you getting a good deal? 

Life insurance is different from insuring your house or automobile. If you stop and restart a life insurance policy, you might not get the same deal the second time. 

For example, if ‘Susan’ purchases life insurance in her early twenties, the monthly cost will be lower than if she took out a similar policy several years later. ‘Susan's’ monthly payments on any new policy she purchases are expected to climb in line with her age and other factors over time. Increasing age, new medical conditions, family medical history and occupation changes impact the level of coverage available and the premiums to be paid.  

Questions to ask yourself… 

Before determining whether or not to terminate your plan, there are several factors to consider. If you're thinking about cancelling your insurance because it no longer satisfies your needs, it may be feasible to upgrade, expand, or adjust your plan without entirely cancelling it. 

Life insurance should provide you and your dependents with some peace of mind. It could also provide a financial safety net for your family if you die. As a result, it is sensible to exercise caution when cancelling or ceasing payment on a plan. 

Definitions:  

• Mortgage: a legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt. 
• Household: a house and its occupants regarded as a unit. 
• Critical illness: critical illness insurance, otherwise known as critical illness cover or a dreaded disease policy, is an insurance product in which the insurer is contracted to typically make a lump sum cash payment upon confirmed and verified diagnosis. 
• Income protection: income protection plan (IPP) is an insurance policy which pays policyholders who are incapacitated and unable to work due to illness or accident. IPP policies were formerly called ‘permanent health insurance.’ 

 If you’re still in doubt about your insurance policy, get in touch or call 0121 285 8528.  

The purpose of this communication is to provide technical and generic information and should not be interpreted as a personal recommendation or advice.