One in five older life insurance customers considering cancelling their policy due to cost-of-living crisis

Over-50s life insurance customers are coming under increasing financial pressure with a growing number thinking about cancelling their monthly premiums because of the cost-of-living crisis, according to new research.

Related topics:  life insurance,  insurance,  over 50s,  Cost of living
Warren Lewis
12th April 2023
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"While it might be true that not all types of insurance are indispensable, it is important to think carefully before cancelling life insurance cover"

A new study of 1,000 over-50s by financial mutual, Scottish Friendly, found that 22% of customers are thinking about cancelling their monthly payments due to rising inflation and cost of living pressures. According to the study, Women are most affected with 28% considering stopping paying into their plan, compared to just 17% of men.

Scottish Friendly highlights that consequences for customers cancelling payments could be severe as it would put their cover at risk and mean they could possibly end up with nothing.

57% of respondents with an over-50s life insurance plan said they took out a policy to cover funeral costs, while 46% did so to provide financial support for their family in case of their death. 9% started a plan to help pay off their mortgage.

However, as people’s incomes are squeezed by inflation, which rose to an annual rate of 10.4% in February, consumers are looking at ways to reduce their outgoings.

The survey revealed that two of the biggest draws to potential new customers were payment certainty (27%) and lower premiums (31%). However, 35% of respondents said the most important feature in an over-50s life insurance plan would be guaranteed cover.

Jill Mackay, Head of Marketing at Scottish Friendly, comments:

“Inflation has increased again after falling for three consecutive months and continues to affect household budgets.

“Dealing with price rises is particularly difficult for those on fixed incomes, such as those in retirement. When times are hard, people will naturally look for ways to save money by cutting back on their spending, and protection may be one of the areas in which they look to do so.

“However, while it might be true that not all types of insurance are indispensable, it is important to think carefully before cancelling life insurance cover. If customers choose to stop paying in then it risks ending the policy and they may end up not getting back what they paid in.

“The best over 50s life insurance policies do offer some payment flexibility and customers could be entitled to a proportion of their cash benefit if they stop paying in, but it’s vitally important to speak to your provider first before making any final decisions.”

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