The report showed that the main reason many households are opting to cancel their insurance is a lack of money.
100 surveyed independent financial advisors reported that at least 70% of customers had scrapped their protection. This decision applied right across the board, with cover for pets and household appliances, including vital equipment such as boilers equally affected. More worrying, however, is the revelation that many cash-strapped Brits have also opted to cancel more essential cover such as income protection benefit, which pays out if someone is unable to work due to ill health.
The study showed that a lack of income is forcing households across the country to reconsider what are essential outgoings and many have decided that insurance is a luxury they simply cannot afford.
Six out of ten financial advisors said they had personally seen an increase in the number of customers falling into financial hardship over the last twelve months. Nearly half of the customers affected said that the reason for their financial difficulty was a drop in household income.
The figures have been described as “sobering” and there is now growing anxiety that this type of cost-cutting could have a dire affect on people in the future. Cancelling insurance is a false economy, and although you may be saving money in the short term, it could work out much more expensive if the worst happened – leaving individuals vulnerable. Taking into account the long-term outlook rather than just a “monthly shortfall” is the best way to tackle things.
If you are worried about your monthly outgoings and repaying debts, a solution such as a Debt Management Plan, could help you to manage your debt repayments at an affordable rate so that insurance policies can be maintained.