When you take out an insurance policy, you are usually in it for the long run. However, circumstances alter, and as a result, you can sometimes be in a situation where considering cancelling policies can cross your mind. For example, in times of economic change and stress, it has become common to cancel expenses you’d class as not required, such as memberships, subscriptions, beauty treatments and in some extreme cases, insurance policies.
Covid-19, rising oil prices, unease in the Middle East, and being on the brink of another World War have created vast amounts of financial stress, worry over job status and overall health. Life can change drastically overnight, and considering the current situation now, it has become crucial to keep existing policies more than ever. Insurance offers stability for yourself and your loved ones in a time of the unknown.
What is insurance?
Whether it be life cover, critical illness cover or income protection, all insurance policies were taken for a reason.
Life insurance, also referred to as life assurance, allows you to make sure your family is protected in the event of your death during the policy term. Most life insurance policies are designed to pay a cash lump sum to your nominated members. This can help with funeral costs, mortgage repayments and additional financial security for a family.
Critical illness cover ensures that you and your family remain protected if you are diagnosed with a critical illness during the policy term. This policy is designed to provide a lump sum that can be used to alleviate the financial pressures whilst coping with the emotional decisions of treatment, care, transport, and travel arrangements. Whether you choose to repay your mortgage, use funds to replenish the loss of income, or seek pioneering treatment, knowing that there are options helps your family at a very stressful time.
Income protection is designed to provide replacement income if you cannot work due to an accident or sickness. A monthly benefit is paid after a ‘deferred’ or waiting period. Then, depending on the terms, the benefit would continue for a specific time.
I can’t afford my insurance anymore; should I cancel it?
You are not alone if you have considered cancelling your policy or if you think your premiums are too much. However, we strongly recommend that you keep any existing insurance as you will immediately lose all benefits on cancellation.
Insurance commonly has the flexibility to stick with you for life while accommodating to the changes that occur throughout. Check whether there is a ‘waiver of premium’ on your policy, whereby the provider maintains premiums if you cannot work due to an accident or sickness. There might be an option to reduce the sum assured or make adjustments to the cover, thereby temporarily reducing the premium.
Consider the importance of the insurance and what protection it gives to you and your family. What happens if you cancel? There would be no pay-out should anything happen. You might also have other features within the policy, such as a 24-hour GP helpline, counselling services, medical professionals, or lifestyle and nutritional advice. These are invaluable and will help you and your family in ways outside of financial support.
Can I cancel my policy and reapply later?
Yes, you can, but it is essential to understand that a new application will be fully underwritten. Many factors dictate an insurance premium: age, smoker status, medical history, and general industry changes.
When you apply for a new policy, you will be older, and sometimes this can be a considerable number of years. Premiums increase with age. You may have changed your smoker status. Your medical history may have changed. As life goes on, maintaining our health can sometimes be out of control. For example, suppose you have recently been diagnosed with a health condition you previously didn’t have. In that case, this could affect the issued terms, whether exclusions are put on the policy or premiums are rated and increased due to the associated risk.
Changes within the industry may also affect the products available and how the type of insurance is costed.
Guaranteed insurability
Guaranteed Insurability Option enables your policy cover to be increased without further medical underwriting, regardless of whether the circumstances in life have changed – such as a sudden illness that was not originally on the policy.
Having a guaranteed insurability option makes it easier to adjust your cover when you need it. For example, an increase in mortgage, the birth of a child, or a house move are just some reasons that clients have needed to use the guaranteed insurability option. Therefore, it is vital to understand whether this feature is available on your policy.
Each provider will have its own terms regarding guaranteed insurability, but typically it is an amount or percentage relating to the original sum assured. Again, this would be permitted without further medical information or disclosure.
We are here to help
If you are affected financially due to the ongoing circumstances or are just unhappy with the premium you currently pay, please contact us before cancelling.
We want to make sure we can help you understand all the options available to you, ensuring you are financially resilient should an event occur.
We are independent brokers and advisors, and have access to all insurance providers. We will not charge you any fees for advising or arranging insurance for you. It is important to us that we take the time to understand your requirements to help provide a recommendation that is right for you.
We’re here to help you, and you can contact us here for a non-obligatory consult.
