Think twice before cancelling that protection policy

PruProtect, the joint venture between Prudential and South African market leader Discovery, has highlighted the potential dangers of cancelling existing protection insurance policies.

In the current economic climate many consumers are feeling the pinch and looking for ways to save money - and insurance policies, such as life insurance, could be one of the first monthly outgoings under review.

However, there are two important reasons why consumers should think very carefully before taking action:

Think once... the cost of cancelling an existing policy and replacing it in a few years time could cost thousands in additional premiums over the term, as protection insurance tends to become more expensive the older you get.

Think twice... if a person's circumstances change during a period where they are not insured, such as a change in health or lifestyle, future premiums could be loaded to reflect the change, or in extreme circumstance cover may be declined completely.

Even if the person remains in good health the cost of replacing cancelled cover could cost more than £6,000 over the term, if not more, depending on the individual circumstances.

Kevin Carr, Director of Protection Development, PruProtect, said: "The danger in these uncertain times is that people may either postpone buying the insurance they need, or even consider cancelling what they already have. Protecting the financial well-being of the family is vitally important, particularly in times of economic uncertainty. The long term cost of cancelling a policy could end up costing a customer thousands of pounds. Not only will the person not be insured but if anything happens to their health they may not be able to replace the cover they have lost. The numbers speak for themselves."