GFC key reason for dropping life cover

A recent study has found people are increasingly using the global financial crisis (GFC) as a reason to cancel their life insurance policy.

More than 65 per cent of consumers consider affordability to be a key reason for cancelling a life insurance policy, according to a recent independent study commissioned by ING. Australians are increasingly stating the GFC as a reason to cancel a life insurance policy as they struggle with the prospect of recession, unemployment, stock market declines and other bad financial news.

In response, ING Australia has launched a program that provides strategies for maintaining insurance cover.

“Many people think life insurance is a ‘nice-to-have’, but it needs to be considered a ‘must-have’,” said the head of product for ING Australia’s life risk division, Gerard Kerr.

“In today’s uncertain financial environment, the only sure way to protect family assets is through life insurance.”

ING Australia’s life insurance maintenance program is aimed at providing consumers with information, tools and tips to help them maintain their life insurance cover, even during difficult times.

“Our research indicated that a majority of the life insurance cancellations were based on financial hardships, including loss of income,” Kerr said.

“But cancelling a policy can make it difficult, or even impossible, for some people to get covered again due to their age or medical condition. It’s a dramatic step that people often take because they don’t know about their other options.”

He said such options include taking advantage of some of the in-built features of life insurance products that enable the policy owner to reduce, or even pause, their premiums for a period of time.

“Before people think about cancelling their life insurance, they should explore options to make their cover more affordable — including taking advantage of the flexibility in their policies,” Kerr said.

Other options include re-thinking how much cover is actually needed. ING has launched an online insurance calculator that determines the right level and cost of life insurance.

“Every year peoples’ circumstances change, so it is important to adjust your life cover to suit the situation,” Kerr said.