Many households around the country are coming under increasing financial strain as the impact of Covid-19 bites. In these uncertain times, it’s natural to look at the things you can cut from your monthly budget – and think about your personal insurance policies.
While it might be tempting to write these off as non-essential and trim them from your spending, there are some key reasons why it’s worth holding on to insurances if at all possible.
If it’s getting tough to hold on to your policies, there are things you can do to lower their cost without having to drop them altogether.
Some insurers are offering premium holidays, where cover remains in place but premiums do not have to be paid, while others are allowing people to put their policies on hold. If you’re facing longer-term disruption, you may be able to trim the amount of cover you have in place or, depending on your financial situation, look at increasing your insurance excess.
If you’ve had your insurance policies in place for a while, you may have developed some health conditions in that time. If your policy includes them and there was no unwitting non-disclosure at application time, these are covered under your existing policy, as you took it out before they developed. But if you cancelled your policy, you would lose that cover – and it might be hard to get a future insurer to provide it again. You might find exclusions or extra premium charges were applied relating to those conditions.
In light of Covid-19, some insurance providers have had to rethink some of their policy wordings and covered conditions, at least for now.
That could mean that if you were to swap to another similar policy in the future, you could find you end up on less generous terms. It might mean indemnity income cover, for example, rather than agreed value – or more restrictions on redundancy or Covid-19-linked claims.
If you’ve had a level premium structure in place, you’ve probably been paying higher amounts than you absolutely have to now, in return for steady premiums as you get older. But if you cancel your cover now, you’ll not receive any of the benefits of that levelling, and instead only have experienced the higher cost.
Another problem with cancelling a policy or letting it lapse is that you won’t be covered for a claim.
It would be extremely disheartening to pay premiums for years only to cancel your policy and then experience an event that would normally lead you to claim. You can’t know what is around the corner, but insurance is designed to protect you from those risks you can’t see coming.
We can help. Get in contact with us today to talk about what you can do to keep your cover in place – or what to consider if you need to change it.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.