Is life insurance still an asset for over-50s?
Posted on Friday 25th of September 2015.
Most people start families in their 20s or 30s, often this is also the first time they think about family protection, life insurance and making sure that their loved ones are taken care of if they die.
Once this life cover is purchased, it is common to forget all about it all together or only review it every couple of years. When your circumstances have changed and your family has grown up, it might be tempting to question whether a life insurance policy is necessary at all. However, cancelling a policy might involve hidden costs.
So, what are the possible pitfalls of cancelling your policy?
It seems rather obvious to say, but if you cancel your policy the first thing you will lose is the cover it offers.
If you need to take out a future policy for any reason, you will find it far more monthly payments may be more expensive to give you the same amount of cover as the original agreement
You might also find that you still need a life insurance policy as grandchildren could become dependents and the financial future of your partner might be in jeopardy if you pass away.
It might be that if you died over the age of 50, your partner could still be several years away from retirement age, and may therefore be dependent on an additional source of income that a policy could provide.
What are the savings?
Most UK life insurance policies have no charge for cancellation and if you cancel your life insurance policy you will save the cost of the monthly contributions which could well be ready cash you can’t do without. Whilst you might be making savings to your financial plan in the short term, the financial risks to your family dramatically increase if you were to unexpectedly pass away.
Life insurance in many ways is a far wiser investment for families with less disposable cash than others, as the financial pressures on wealthier families in the event of bereavement will be lesser.
Some policies are designed to pay for the cost of schooling and university education of children if a parent dies, but this might seem redundant if your children are now grown up and have left home.
Lower Insurance Premiums
Cancelling a policy outright is not the only option open to policyholders facing financial difficulties. It might also be possible to agree with your policy provider to pay a reduced contribution in return for a lower level of cover for a period of time until your financial situation improves.