Why clients cancel their life, income protection and even health insurance polices
Many people on a yearly basis cancel their insurance policies. The general rule of thumb in the industry is about 10% of policies are cancelled each year.
This adds up to a lot of change. When looking at my client base there is a common thread amongst those that choose to cancel polices each year.
Firstly, we get clients who no longer need the cover. If they have had a policy for a number of years and needed to have life cover or income protection while they had children at home, a mortgage, business partners or a number of other financial requirements and these have changed, then we are the first to suggest in a review that they may no longer need to be covered for the risk. It’s all about doing a review and a thorough risk assessment.
Secondly, we get clients who have been told they will get a better deal elsewhere, through maybe another adviser or even a bank. This can be more difficult to make sure the client has the best advice. Is the new policy covering things differently than the old? Is the policy being replaced really that much inferior? Have the clients fully disclosed all their medical issues to the new insurer? If the answer to this is yes, then it maybe the best decision to move their policy across.
Thirdly, it’s that the client can no longer afford the cover. A $500,000 life policy at age 30 costs $37.63 while the same cover at 60 is $351.31. So in many cases the policy has just got too expensive and the client can no longer justify the price. It’s then where we may be able to offer a more cost effective solution. If they had bought level cover to age 70, the price would be $71.31 for the life of the contract.
However we seldom have these conversations with clients who have invested in level cover options. This is an insurance solution where rather than yearly increases in price, the price stays the same for the length of the contract, or at least can only move if the company experiences an overall increase to the whole book. Individual age changes are no longer made to the policy.
In my 15 years in the business no one has ever complained to me that they were on level cover pricing.
So my one piece of advice to anyone wanting insurance, seriously considerLEVEL PREMIUM options. It’s an investment in your future and may well mean you still have cover when you really need it.
If you want to have a look at this option talk to me or another member of the Plus4 network and we will be happy to help.