Four risks of cancelling your life policy
In light of the Momentum saga, where they had initially refused to pay out the widow of Nathan Ganas, you may be considering cancelling your life policy.
The industry regulator, the Financial Sector Conduct Authority, cautions consumers on the risks of impulsively cancelling a policy.
- A customer who cancels their life policy may find it very difficult if not impossible to find new cover if they had developed medical conditions along the course of their policy.
- A life policy taken out when you are younger is usually a lot cheaper than a policy taken out when you are older and a new policy taken out by an older person may not just have higher premiums but it may be difficult to get the same cover and limits they had before.
- Early termination of an investment policy could attract charges, and charges could also be payable on entering into an alternative investment.
- If a customer does decide to replace their policy, it is therefore essential to first obtain a detailed comparison of the features and costs of the old and new policies, preferably with the help of a qualified financial adviser.