PruProtect, the joint venture between Prudential and Discovery, highlights the potential dangers of cancelling existing insurance policies.
In the current economic climate many consumers are feeling the pinch and looking for ways to save money - and insurance policies, such as life, critical illness and income protection, could be one of the first monthly outgoings under review.
However, there are two important reasons why you should think very carefully before taking action:
- Think once... the cost of cancelling an existing policy and replacing it in a few years time could cost thousands in additional premiums over the term, as insurance tends to become more expensive the older you get
- Think twice... if your circumstances change during a period where you are not insured, such as a change in health or lifestyle, future premiums could be loaded to reflect the change, or in extreme circumstance cover may be declined completely
Even if you remain in good health the cost of replacing cancelled cover could cost more than £6,000 over the term, depending on individual circumstances.
Kevin Carr of PruProtect says, "The danger in these uncertain times is that you may either postpone buying the insurance you need, or even consider cancelling what you already have. Protecting the financial wellbeing of your family is vitally important, particularly in times of economic uncertainty. The long-term cost of cancelling a policy could end up costing you thousands of pounds. Not only will you not be insured but also if anything happens to your health you may not be able to replace the cover you have lost."
Life insurance: News update: 05/02/2009