Life Insurance – Consequences of Cancelling Life Insurance

Due to the current economic climate, "Mark" was made redundant from a high-paying job, but he was fortunate enough to find a new one within a few months. While Mark was paid a decent redundancy package from his previous employer, unfortunately his new salary is about 40% less than he earned before, so he is looking for new ways to cut his expenses.

Mark is married with two children, and in his mid 40's. For the past 15 years, he's been paying premiums on a life insurance policy that was originally purchased to help his wife pay the mortgage on their home in the event of Mark's death. With a much smaller monthly cash-flow, and two children to also support, Mark is considering dropping his life insurance policy to eliminate the monthly premium expense and thus increase his cash flow.

If you are like Mark and considering cancelling your life insurance policy, you should first take into consideration the long term consequences:

• You might want or need life insurance in the future. If so, a new health problem might make it more difficult or expensive to buy a new life insurance policy. Even without a health issue, the older you are, the more expensive life cover will be.
• Are there alternatives to surrendering a life insurance policy you no longer need? Perhaps you can reduce or restructure your life insurance cover to you're your payments more affordable. Doing this may significantly reduce your life insurance premiums, but still give you some cover.

• If something did happen, could your family survive? If you suddenly died and didn’t have a life insurance policy, your spouse and children may suffer the consequences. Your family could be left with hefty mortgage repayments, bills and other living expenses.

When it comes to life insurance, try to avoid making any rash decisions. A bad decision may negatively affect the welfare of your loved ones, as your health, personal and financial position may possibly change overnight.

Disclaimer:

This article is not designed to provide personal financial or investment advice. The information provided is general in nature and does not take into account your particular investment objectives, financial situation or investment needs. We recommend that you speak to an xLife specialist financial Adviser before you make any decision regarding Life Insurance, Total Permanent Disability (TPD) Insurance, Trauma (critical illness) Insurance and Income Protection Insurance. The statistics and figures presented in this report are based upon historical data, obtained from external sources. There is no guarantee or suggestion that markets will behave as they have in the past. Future results will be affected by political & economic events. Information is not directed to any particular persons investment financial objectives. Therefore, you must seek advice tailored to your individual circumstances before making any specific decisions. xLife is a Corporate Authorised Representative of Millennium3 Financial Services Pty Ltd AFSL No.244252