Think twice before cancelling: Why you should hold onto your life cover
In challenging economic times, reviewing your budget for potential savings is a natural step. While cutting expenses can offer immediate relief, it's crucial to consider the long-term implications of cutting down on insurance, especially when it comes to your life insurance.
Before you cancel this vital protection, let's explore the enduring value it provides for your financial security and the future of those you care about most.
Security for your loved ones
Life cover is designed to help your family manage everyday expenses, settle debts or cover future needs if you pass away. It provides a financial safety net, ensuring your family can maintain their lifestyle, cover daily expenses, settle outstanding debts and fund future aspirations, such as education, even if you're no longer there to provide.
Without this protection, your dependants could face significant financial hardship, lose important assets, such as a family home or car, and be unable to take advantage of future opportunities.
Learn how to protect yourself and your loved ones by downloading our Insurance essentials e-book.
The advantage of early coverage and locking in your rate
One of the most significant factors influencing your life insurance premiums is your age and health at the time of application. The younger and healthier you are, the more affordable your monthly payments tend to be.
If you cancel your current policy and decide to reapply later, you'll likely face substantially higher premiums simply because you're older. You also can’t just ‘pick up where you left off’; you’ll have to apply for a new policy from scratch, making your current rate a valuable asset.
Protecting against future health risks
Your current good health is a precious asset, but it's not guaranteed to last forever. No one knows what illness or disease will strike later in life. Should your health decline after cancelling your policy, you might find yourself facing much higher premiums for new coverage or even be denied altogether.
Maintaining your existing policy ensures you remain protected, regardless of any future health challenges, securing peace of mind for you and your family.
Protecting your estate and debts
Upon your passing, any outstanding debts you leave behind must typically be settled from your estate. This can significantly diminish the inheritance intended for your loved ones. A life insurance policy acts as a safeguard, providing funds to cover these debts, ensuring your family's financial future remains secure and your legacy is preserved as you intended.
Other considerations
Before making a final decision, it’s important to understand that cancelling your policy means you won't typically recover the premiums you've already paid; those payments covered the protection you've enjoyed up to that point. Instead of outright cancellation, consider these alternatives:
- Review your coverage: Is your current coverage still appropriate for your needs? Has your lifestyle or your job demands changed? You might be able to reduce your coverage amount to lower your premiums rather than eliminating it entirely.
- Explore policy options: Depending on your policy type (e.g. whole life), you might have options such as reducing the death benefit, using accumulated cash value to pay premiums or converting to a paid-up policy.
- Speak to your insurer: Your provider may have flexible payment options or be able to guide you through alternatives that suit your current financial situation and where else you might save without leaving your loved ones unprotected.
Ultimately, life insurance is far more than just a monthly bill; it's a critical component of a robust financial plan and a profound expression of care for your family.
Ensure your family is protected with life cover designed to provide stability and support during life's most challenging moments.
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Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).
Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.
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