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Hold on to your cover in tough times: why and how

Be prepared for any big financial surprises by making sure you keep your life, dread disease, disability and funeral cover policies in place. Don’t skip your premiums!

9 December 2019
3 minute read

Man with son

Having insurance means that your family can be taken care of financially in case of unexpected events like accidents or illnesses. That’s why you need to keep paying your premiums on time, even if it means cutting a few other expenses from your budget.

Why do you need to keep your cover?Quite simply – insurance cover can protect you and your family from financial hardship. Here’s how.

Life cover
A pay-out from a life cover policy can be used to meet daily living expenses such as food, clothing, school fees and a home loan. If you pass on and you don’t have life cover, how would your family cope financially? A life cover policy cannot ease the pain of your passing, but it can lessen the financial burden.

Funeral cover
Funeral policies pay a sum assured to the beneficiaries - usually two days after a claim. This money can be used for a funeral service and burial. Without funeral cover, could your loved ones afford your funeral service and burial?

Disability cover
If you were disabled and unable to work and earn an income, how would you and your family cope financially? Could you afford the care and any rehabilitation costs such as home and car adaptations? A pay-out from a disability policy will pay for these extra costs and could replace lost income.

Dread disease
Getting seriously ill is expensive and can mean a loss of income. A pay-out from a dread disease policy will help you pay for treatment and can provide an income if you are unable to earn while undergoing treatment.

Why cancelling your cover is a bad ideaThere are times when money is really tight and you might be tempted to skip a premium or cancel your policy, even if you know how important insurance is. Here’s why this isn’t a good idea.

The unexpected happens
Unexpected death, disease and disability, and the accompanying financial losses are just that - unexpected. As much as you think something could happen, it is hard to believe it will. Unfortunately, the unexpected becomes a reality for too many of us. Insurance cannot take away the trauma of these events, but it can lessen their financial impact.

Your premiums might be higher if you reinstate a lapsed policy or take out a new policy
If you don’t pay your premiums, your policy will lapse, or be cancelled. And if you reinstate a policy or take out a new life, disability or dread disease policy you may have to go through medical underwriting. This could mean you end up paying a higher premium, or not qualifying for the benefits you originally had, due to a change in health, or your increased age.

You might be able to negotiate a lower premium
Insurance is no longer a “take it or leave it” product. Most insurance policies today are flexible, and you can adjust them to better suit your budget. All you need to do is chat to your financial advisor or insurer to see how you can adjust your cover to make it more affordable.

You may be able to reduce your risk and therefore your monthly premium by making certain lifestyle changes, for instance if you stop smoking, or if you have changed from a high-risk occupation to a lower risk one. Check with your insurer on how these changes can benefit the premium on your policy.

If you are going through financial difficulties, it is best to speak to your financial advisor or insurer to see how they can assist you.

Options if you’re strugglingStruggling to pay your premiums? Need to cut costs? Contact us to discuss how we can tailor your policies in line with your budget - without compromising on the cover your family needs.

Posted January 14, 2019

Updated December 9, 2019

1Life is an authorised FSP and Insurer
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