News & Views

How might your insurance provider be able to help if you are struggling financially?

For too many of us right now, the cost of living crisis is part of our daily lives. Many of us are looking to make savings in any way we can.

You might be tempted to think about making savings by cancelling your direct debit to your life insurance company. You really need to think carefully, however, before taking this step.

Typically, your insurance policy will end once you have missed three consecutive premiums. This means that you will lose valuable insurance cover, and possibly deprive your loved ones of the peace of mind you were so keen to provide when you took out the policy.

You might be tempted to think that you will simply take out a new life insurance policy once the cost of living crisis eases and your personal financial situation improves. If you think this way, however, not only are you losing valuable cover in the meantime, but it might not be as easy as you think to obtain replacement insurance cover in the future. Being a few years older inevitably means higher premiums, and by the time you apply for the replacement policy, your health or personal situation may have deteriorated, meaning that the insurance companies will only offer you cover at a much higher premium, or may not wish to insure you at all.

If you have decided, however, that you really can’t afford your life insurance premium, before you cancel your direct debit, please speak to your insurer to see how they might be able to help. 

For example, your insurer might be prepared to offer:

• Payment deferrals – where you can miss several premiums, and then make up the missed amount later. They may allow you to do this via a payment plan instead of demanding all of the outstanding sum in one go
• A reduction in the sum assured, while keeping the policy in force
• A reduction in the term of the policy, and thus a reduction in your premium, while keeping the sum assured unchanged
• An option to top your cover back up at a later date with simplified underwriting, so you won’t need to answer all of the health questions that you did at application stage
• An option to top your cover back up at a later date with no underwriting
• A reduction of the scope of your cover, so the range of benefits available to you is reduced, but you can still maintain core elements of the policy