Life insurance Updated:
Have you ever cancelled a life insurance policy? If so, you're not alone – research from Royal London has revealed that 52,000 people cancelled their over-50s policy last year, equating to an estimated £173m in life insurance being lost.
The 52,000 total means that 28% of those who purchase over-50s life insurance cancel their policy later down the line, and as a result, they lose their cover and won't be able to benefit from the money they've paid should the worst happen – in terms of premiums paid, it collectively represents £86m going straight down the drain.
The rate of cancelled policies is truly alarming, but so is the amount of wasted cash. Unfortunately, the research revealed that these cancellations are often driven by financial difficulties: despite 33% cancelling it because they no longer needed the policy, 20% said it was due to long-term money issues and 40% said it was because they needed to prioritise other bills, such as mortgage payments or energy bills.
The fact that so many people cancel due to financial concerns will make the amount of lost money even harder to cope with, particularly given that 25% of those whose cover lapsed have no savings or investments. After cancelling, 41% said they felt 'unhappy' to have lost premiums they had paid, especially if they'd held the policy for a long time (unhappiness levels rose to 45% among those who had held the policy for over three years).
Cancelling will leave customers "poorer and unprotected", it said in the report, and concerns have been raised about the ease of cancelling a policy (which drives up profits for insurers) and the fact that most policies lack the safety features customers need. "This research highlights how poorly designed products affect customers, especially those on a low income, and confirms why the over-50s life cover market must change current practices," said Jerry Toher of Royal London.
"Not all over-50s life insurance policies are the same – the underlying details can make thousands of pounds of difference to a customer. We urge customers considering this type of protection to shop around. But don't just compare the price – take time to understand the product features and how it works to prevent getting caught out."
So, don't run the risk of being unprotected. Make sure to compare quotes before you invest in suitable cover so you can be confident in being able to afford the premiums for the long-term, and that way, you won't see money go down the drain.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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