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You Would Be Crazy To Cancel Your Life Cover Policy

Before you decide to cancel your life insurance policy, think twice. If you cancel your life insurance policy, you don’t have any life cover and that means no pay-out if you pass away. Sure, that’s the obvious reason for not binning your life cover policy, but there are some less obvious reasons why you shouldn’t stop paying for your life cover. Have you considered that you might not be able to qualify for life cover again, should you need to reapply?

Sure you might just laugh it off, but the reality is that thousands of South Africans cancel their life cover policies each year and then, down the line, when looking to take out cover again, can’t, because they don’t qualify as a result of health issues.

Here is an example:
John has a R2 000 000 life cover policy in place but doesn’t think it’s worth paying for anymore and lets the policy lapse. A year down the line, John is looking to reapply for life cover but during his medical examinations the life insurance company picks up that John has an aggressive form of Cancer. On the basis of that finding they decline his application for life cover. Now John is in a massive predicament. He needs this life cover more than ever before, but doesn’t qualify for it anymore. Had John hung onto his old life cover policy, his life insurer might not grant him more cover, based on their findings in the medical underwriting, but they certainly couldn’t have taken his existing cover away from him. But once his policy has lapsed, he needed to go through the process of reapplying. It’s a brand new application based on a brand new set of medicals.

What if you cancel your life insurance policy and down the line find out that you don’t qualify anymore?

Don’t find yourself in a predicament like this!

If you are having financial problems and your life insurance premiums are on the chopping block, you might want to consider the following before you simply cancel the policy altogether:
  • Look at the viability of other insurance policies in your portfolio
  • Remove the aggressive premium increases on your life cover policy
  • Find out if your insurer will allow you to take a “premium holiday”
Make sure you exhaust every possible option before letting your life cover policy lapse. Not only is it going to cost you more (because you are older) down the line, but you could be one of the unlucky few who picks up a nasty illness and then can’t get insured again.

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The iHound