Life insurance is no longer a privilege that some people venture into. Life insurance is one of the biggest and most important requirements of modern-day lives. It is something that everyone must-have. After all, life insurance is a product that assures your family will have strong financial support after your death. This is an assurance everyone needs and that is precisely why you should buy a good life insurance plan and maintain it with care. Never let your policy lapse or never even think of cancelling a cover. Why do you ask? Take a look at this article to get the answer.
Why Should You Not Cancel Your Life Insurance Policy?
Here are some reasons that tell you why you must not consider an existing life insurance policy coverage:
- It covers debt -
A vast majority of the people these days have loans that they repay with EMIs. it is therefore quite possible that you have some loans and your valuable assets, including the family home, is under the mortgage. At such a time, you need to have a life insurance cover. Life is unpredictable and you can die at any time. Have you considered how your family will repay the loan after that? This is why you need an active life insurance cover at all times. If you die, the loans can be repaid with the help of the sum assured received. This will allow your family to keep the assets and they also won't have to struggle to arrange for the finances needed to clear the debt that you accumulated.
- It assures financial freedom - Plan B
If you have dependent family members who depend on for their financial needs such as education costs, health costs and also their basic livelihood, you need to ensure they will have financial aid if you die unexpectedly. They should have the financial freedom to pay their bills on their own and to carry on with their existing lifestyle without knocking for help on anyone else’s door. Keep your life insurance plan active and you will ensure this happens.
- Cancellation of your Life Insurance Policy will lead to financial loss -
If you cancel your life insurance plan suddenly before the completion of the policy period, you will lose a lot of money. Many plans have a clause wherein you are not entitled to get any money (that you paid as premium) back if you decide to cancel the plan halfway through. This mainly happens in term insurance plans. So be very careful of this clause and make sure you do not end up losing thousands of rupees just because you decide to cancel your life insurance policy prematurely.
It May be Difficult to Get a Replacement -
It is common knowledge that with time and age the health of a person begins to deteriorate. Your family situations also change. All these factors make it more difficult for you to get a life insurance policy. Many insurance providers are hesitant to issue life insurance plans to people who are around 50 years of age. In comparison, getting a life insurance plan at the age of 25 is a piece of cake. So if you had gotten your life insurance plan earlier on in life, try not to cancel it as you may struggle to find a better plan at this stage of your life.
- It may cost you more - Getting life insurance at age 25 is not only convenient, it is inexpensive as well. If you got a plan when you were in the twenties, you surely have a very cheap policy with you. Do not cancel this, as the new plan you get now will certainly be more expensive. An older person is seen as having a higher amount of risk associated with him, and that is why he pays more for a life insurance cover.
- Exclusions May Pose Issues - Some life insurance plans have clauses, such as no claim to be made within the first year of the policy, etc. If you cancel your existing cover and get a new one and then something happens to you, your family may struggle to even get the sum assured after your demise. Always remember that life is unpredictable and you never know what dangers lie at the next corner. This is why you must have a continuous and uninterrupted life cover that can help your family at the time of a need.
Keeping these points in mind, you can understand why cancelling your life insurance plan may not be the best idea at all!
To Wrap it Up
As you can clearly see from the points mentioned above, there are some very logical reasons that tell you why you should not cancel your life insurance policy. However, even after taking these points into consideration, if you still feel your life plan is not suitable as it is too limited in its coverage or it is way too expensive and you have come across a better alternative, then cancel it and go for the better option. But never just cancel a life cover without a backup in place as staying uninsured is a very risky and foolhardy thing to do.