Life cover can help your family financially when you are no longer around. The money can be used to cover immediate expenses through a cash pay-out, such as monthly bills and groceries, or can be tied to a big ticket item like a house or car, and pay off the outstanding amount on your death.

This financial support can be a relief to a grieving family, removing the immediate financial strain they may encounter upon your death. For many insurance premiums are seen as a grudge purchase. You are paying for something each month that you may never make use of, or see the benefit of yourself (in the case of life insurance).However, when times are tough, insurance may be one of the areas that you look at cutting back on.

But there are a few things you should consider before cancelling your life cover:

  1. Your risk increases with age: As you get older you are considered to be a higher risk to an insurance company, as such cancelling life insurance when you are younger, and applying again later in life may see you paying much more in premiums and facing possible exclusions compared to if you had applied at a younger age and continued with the policy.
  2. You can’t claim if you cancel: Even if you have been paying your premiums for the last 20 years, if you cancel today and want to make a claim next month, you cannot do so as you are no longer covered by the insurance policy. The same applies if you miss any monthly premiums, any claims you make may be repudiated.
  3. Your family will be responsible for your debt: If you have any form of debt upon your death, such as a home loan, car loan or credit card, your family will be responsible for paying these debts off. This would most likely be settled from the estate, but this could leave your family facing financial difficulty. Life insurance can be taken out to cover these debts on your death, removing the burden from your family.
  4. It will support your children: If you have young children, taking out life cover will ensure that they have financial support if you should die. This money can be invested and used to fund their education and pay for their needs after your death.
  5. Life changes can impact your premiums: Reassess your life insurance each year, or following any major life changes, such as a health related incident, changing jobs or moving home. These type of events can impact your life insurance premiums, either increasing or decreasing them. It is also important to tell you insurer any changes that could impact your ability to claim.

Adjust your policy to lower your premiums: If you are struggling to make ends meet, rather than cancelling your life cover to save money, speak to your insurer about adjusting your policy to better suit your budget.