Originally published 29 June 2022. The survey and inflation figures below describe that period; they are not current cost-of-living figures.
In March 2022, the Office for National Statistics reported that UK consumer prices had risen by 7% over the preceding year. Against that 2022 backdrop, research by Royal London, reported at the time by Cover, found that some policyholders were considering reducing or stopping protection premiums. These figures explain the original context of this article, not present-day prices or intentions.
If your budget is under pressure, it is reasonable to review what you pay for protection. Before reducing or cancelling a policy, consider what support it was intended to provide, who depends on it, what other cover you have, and what you might lose. The right decision depends on your circumstances and the policy terms.
Understand what your cover may provide
- A life insurance policy may pay a benefit following a valid claim for a death covered by the policy. The amount, recipient and payment arrangements depend on the policy and your circumstances.
- Income protection may pay a regular benefit if you cannot work and meet the policy’s definition of incapacity, after any applicable deferred period. The amount and duration depend on the policy.
- Critical illness cover may pay a lump sum following a valid claim for a condition that meets the policy’s specified definition. Conditions, exclusions and other terms vary.
Do not assume a particular payout or tax treatment without checking your policy and obtaining appropriate advice for your circumstances.
Three practical steps before changing cover
1. Compare the protection, not just the premium
Ask an adviser to help you compare the amount and length of cover, definitions, exclusions, deferred periods and premiums. A lower premium can come with different benefits or restrictions. You can request a no-obligation adviser call; this is an enquiry, not an instant online price or insurance offer.
2. Review your existing policy
Check the cover you already hold, including any employer benefits. If you are considering replacement cover, compare its terms and any underwriting requirements with your existing policy. A new application may be assessed differently, and a new policy may not offer equivalent protection. Do not cancel existing cover until any replacement policy you decide to take out is in force.
3. Discuss different cover structures
The amount of cover, policy term and benefit structure can affect premiums and the support available. Family income benefit, lump-sum life cover and income protection serve different purposes. An adviser can explain relevant options and trade-offs, including any deferred period for income protection, without assuming that a particular option will cost less for you.
Talk through your options
Changing protection solely to reduce a short-term expense could leave a gap that matters later. If you would like to review your needs, request an adviser call or contact us. An enquiry does not change your existing policy or guarantee a price, saving, eligibility or claim outcome.
