More people considering cancelling insurance policies

We are definitely seeing borrowers having less disposable income available to put towards protection policies. This is a result of two events: the increase in mortgage rates and the increase in the cost of living. For those borrowers who look to cancel or exclude certain cover, we will always try and encourage them to have a small bit of every cover, rather than full cover for something and no cover for something else. Life does not let us choose when we will be ill, unable to work or die, so we need to prepare for bad surprises. For those looking to cancel policies as they feel the premiums are too high, we will try and work with them to find a way to continue the policies. If they are struggling to pay the policy premiums now, they would struggle even more if they no longer had an income or one of them were to die.

Amid the rising cost of living and with interest rates soaring, we're finding more people are considering cancelling their personal insurance to enable them to pay their utility bills and mortgages. This is the last thing people should do as it immediately leaves them exposed. If you are considering cancelling your life insurance or another protection policy, take time to consider the importance of why you took it out in the first place. Also, remember that the policy was taken out when you were younger, perhaps fitter and healthier, so could be more expensive if you cancel and then open a new policy further down the line. Always look to see if there is other expenditure that you could cut back on first. Also, perhaps you could take a payment holiday? Finally, remember that premiums for most life insurance are fixed when the policy is taken out and are guaranteed for the full term of the cover. Some cover is better than none at all so always speak to an adviser to discuss your options.

During economic conditions like these, convincing individuals to invest in insurance is much tougher. Limited personal or household budgets can make allocating money to pay insurance premiums appear burdensome. However, it's important to highlight the long-term benefits and security that insurance brings. For those grappling with stark choices and financial hardships, it's crucial to recognise that insurances like life cover are not luxuries but necessities. Allocating a portion of the family budget to insurance premiums is a prudent decision, as it offers peace of mind and protection in unforeseen circumstances. In challenging times, individuals may consider cancelling policies as a ‘quick win’ to free up some money. That can be a false economy. Most people are unaware that insurance is an allowable expense, meaning, if you are in debt and negotiating with creditors on a repayment plan, you are allowed to continue with insurance essentials such as life cover or critical illness cover.

We're absolutely not seeing an uptick in cancellations but then I think that's because we recommend our policies based on quality and what they do for people rather than cost so our clients see the benefit. Perhaps, however, if you've sold a policy on the basis of 'hey this is cheap and you get a free watch', you run the risk of your clients cancelling when times get tough. If anything, people are more aware of money now so are more open to talking about protection as without it they face dire financial straights quicker. As a result we're finding particularly strong uptake around income protection. Income protection is the most commonly claimed on, yet under-utilised, solution in our arsenal as advisers. On top of this, inflation hasn't made protection premiums any more expensive. If anything, price rices in food and energy have made good quality policies seem cheaper by comparison.

If anything, we are seeing an upturn in clients willing to engage in protection conversations, especially around income-protecting cover. It's very appealing at present for clients to be told they have the option to insure their income and standard of living. There will be clawbacks as a result of the squeeze on people's outgoings, but if you've advised clients well, they understood the need at the outset and the risk of inaction, then fear not. Our sector is remarkably robust in times like these. Famous last words? I hope not.

We advise our clients not to overlook the importance of insurance because unforeseen circumstances can quickly eat at away hard-earned funds and savings. Insurance acts as a protective safety net, and we're hoping people can see how much it mitigates risks and provides security. We aim to help all our clients with their insurance needs and show them the benefits of the different products available. Budget is always a consideration, and something is always better than nothing. Unfortunately, it seems to be that this is something people are cutting back on with an attitude of “it’ll never happen to me”. So, the way we look at it is, as long as people understand the risks, they’re at least able to make an informed decision.