Millions of policyholders across the UK are cancelling vital insurance policies because they can no longer afford them. It’s a reality that is leaving a significant proportion of people financially vulnerable if things were to go wrong.
Indeed, the survey by finance provider Premium Credit found that 38% of people have cancelled at least one insurance policy in the past three years because of rising costs and drops in income. In 56% of cases, the cancellations occurred within the last 12 months.
Furthermore, the research also shows that as many as 12 million people are considering cancelling an insurance policy they own over the next 12 months. Again, the rising cost of insurance and incomes drops were cited as the main reasons why.
Both car insurance – which a person is legally obliged to have if they own and drive a car – and home insurance – which mortgages often depend on – are just two types of insurance policies being cancelled. In fact, since 2016, one in five Londoners (20%) have cancelled their car insurance, while a similar proportion again (19%) have cancelled a home insurance policy.
More worrying, though, is the fact that 22% of people living in the capital have cancelled a life insurance policy over the past three years, 16% health insurance and 9% critical illness cover – all products designed to provide a financial safety net to prevent a family losing their home or being overwhelmed by debt should the main breadwinner pass away.
Premium Credit’s strategy director, Adam Morghem, said: “It is shocking to see so many people missing out on vital, sometimes legally necessary cover due to cost or concerns over payments… This is leaving millions exposed to unnecessary risks and potentially even greater costs further down the line.”
Are insurance costs rising?
The irony is that even though most people who have cancelled insurance policies cite rising costs as a primary reason, the cost of most types of insurance is actually dropping. For example, according to the Association of British Insurers Motor Insurance Premium Tracker, the average price paid for comprehensive car insurance now stands at £466 – the lowest quarterly amount since the start of 2017.
Home insurance costs are also dropping, with the average price paid for combined buildings and contents cover in the first quarter of this year at its lowest for two years.
When it comes to life insurance, most premiums are guaranteed, meaning they cost the same each month going forward as they did when the policy was purchased. This means that life insurance policies are especially easy to budget for.
Perhaps the reason why people feel as though insurance is getting too expensive is because their disposable income has dropped, while the cost of living has increased. This will have left many feeling like insurance is something they could do without, though the truth is that it’s quite the opposite.
A highly motivated result’s driven individual with a wealth of experience in the Healthcare & Group Risk market. I have established strong relationships with large multinational clients through excellent interpersonal skills. I have advanced listening, negotiating & influencing skills that allow me succeed in a team based environment. I have comprehensive knowledge of the UK Healthcare & Group Risk market. This knowledge has been obtained through the Chartered Insurance Institute & self study.