3 Reasons Not To Cancel Your Life Insurance

Posted by on Oct 14, 2013 in Newsletter | Comments Off on 3 Reasons Not To Cancel Your Life Insurance

life-insurance-policy-11Paying your life insurance premiums can be another expense that you may wish to cut out from your tight budget. In these tough economic times, every little bit counts. But before you give your life insurance, carefully consider the possible implications of being uninsured. You would have passed on and will not bear the consequences. However, your family may be in a vulnerable position after your death.

Nobody wants to pay for something that they cannot touch, feel or enjoy immediately. Insurance is essentially buying cover for the ‘what if’ in life. But as the saying goes, death like taxes is unavoidable. While you know when tax season will come up, death is one inevitably that you cannot reasonably calculate. So while you may commit to starting up cover at a later stage when your financial circumstances are better, remember that you may be dead before that time comes.

Do not take bad advice from friends, family members and work colleagues. Speak to a financial planner or your insurance broker. What may seem like a good idea today may not make financial sense in the long run. Even the supposed ‘alternatives’ to life insurance are unlikely to offer you the same level of protection as a proper policy. Here are some points to consider before you cancel your life insurance policy.

1. Starting Up A Policy Later

As you get older, the premiums of your policy becomes more expensive. But even these increases will not be as expensive as starting a policy later in life. You are better off keeping the cover that you started earlier in life than canceling it and restarting a policy even one to two years later.

2. Disease May Strike At Any Time

Even if you are still alive to start up a policy later on and can deal with the increased premiums, remember that you risk profile may also change beyond the age aspect. You may develop some chronic disease than can cause your insurer to load the policy or even decline cover. At this point your chances of getting affordable insurance will fly out of the window – forever.

3. Self Insurance Cannot Match The Payout

Trying to save up the premiums of your life insurance policy in order to build a nest egg for your family in the event of your death may be fruitless. You may feel that the money is more secure and accessible in your hands than with an insurer – a practice known as self insurance. While you may have kept some money away, life savings cannot match a life insurance payout.

When times are tough and the budget is tight, various alternatives may seem like a good idea in saving a few pennies. But do no let desperation cloud your judgement. In the end the only loser will be your family without a life insurance payout that could have secured them for a long time to come.

Greg is an independent writer servicing dedicated websites on insurance in South Africa. He focuses on providing comprehensive information on a range of insurance issues for South African consumers. His aim is to educate existing and prospective life policy holders in order to make the best decision for their long term financial planning.

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