Why you shouldn’t cancel your Life Insurance.
August 16, 2017
“I need the money so I’m going to cancel my Life Insurance”.
If this is what you intend to do, you should seriously re-think your finances before doing that!
- Weigh up the pros and cons
- Life Insurance should be a priority expense
- Being young does not exclude you from death
- Cancellation = Risk
- Applying later in life can be extremely costly
Compare the cost of monthly fees against the huge loss of income and the impact of that on your family. If you think you will get cover later on when your finance gets better, it will only be more expensive to get back in.
What can Happen If I cancel my Life Insurance?
The pros and cons
Many people decide to free up funds by doing away with their Life Insurance policy. However, such a decision could have a dire outcome later in life.
Life Insurance should be a priority
Here are a few reasons why you should have life cover:
- It allows the main income earner to leave behind money to safeguard the future of their loved ones.
- If you invest in Life Insurance at a young age, claims are paid out should you pass on from a dread disease.
- Premiums are a lot cheaper when young.
Just because You are young Does not Protect you from Dying
Many young people simply don’t believe they will grow old and think they will live a long, happy life. However, thousands of young South Africans die every year, killed on the roads or struck down by illness.
Insuring against death, while still young, safeguards those near and dear in the future. At a young age, monthly fees are far lower.
Cancellation = Risk
Don’t be fooled into thinking that a policy can be cancelled today and taken up again at some future date. Everyone is at risk of illness, such as cancer or diabetes, later in life.
If you try to re-start your policy, Insurance companies could then:
- Reject an application for life insurance
- Impose limits and exclusions on the policy
- Exclude payouts on your death
- Load premiums way above the rate of other policyholders of the same age
Insurance firms Weigh up Many factors When working out Monthly fees.
Take a look at these examples:
- A 25-year-old healthy non-smoking male pays R294 a month for R2 million life cover.
- A 25-year-old healthy non-smoking female pays R190 for the same cover.
- Both qualify for the payout, even if they became seriously ill later in life.
- The cost of the life cover would double for a 45-year-old.
- Serious health conditions would make it impossible to obtain cover from any insurance firm.
Cancel my Life Insurance – Viable alternatives
There are a number of viable alternatives to cancelling life cover.
- Reduce monthly expenses by cutting back on unnecessary costs such as satellite television.
- Renegotiate your debt by consolidating monthly payments with the help of a debt advisor.
- Put your retirement needs above present-day needs such as an annual holiday.
- Streamline your short-term insurance on mobile phones and jewellery.
Take a look at the facts
- About 380 South African families lose the main income earner EVERY DAY.
- Despite that fact, more than two million new policies insuring against death, dread disease and disability have lapsed in 2016.
- Liberty Life stated that about 60 000 policies bought from the company lapse every year.
- Affordability has been given as the reason by 90% of those policyholders.
- The majority of the policyholders were young to middle-aged parents.
It is a known fact that South Africans are under-insured. However, life cover should be regarded as a priority for all families. If cash-strapped, seek advice from a financial advisor.
If already insured, but struggling to meet monthly premium payments, contact the insurance company immediately and ask them to assist in making alternative payment arrangements.
To get a FREE Life Insurance quote just fill in the form, without delay!
All info was correct at time of publishing