Whether to keep or cancel a life insurance policy

The issue of keeping or cancelling a life insurance policy is a relevant one for many people.

- Kenny Meiring

The premiums often increase by more than one's income does and they start to use up more and more of the available family budget.

The question is whether you will be helping or harming the family's financial health by cancelling it. I will take you through my thought process when it comes to answering this question.

We typically take out life insurance to cover a particular risk. This would include covering a debt or protecting the family income.

If the debt has been repaid or you have reached the stage in life where you are living off your capital, is there still a need to carry on paying the premiums on the life insurance? If you invested these premiums, at what stage would you be better off?

As we don't know when we are going to die, there is no definitive answer I can give.

You can, however, do a calculation to determine at what age the value of investing the premiums is likely to exceed the sum assured should you pass away. There are, however, a few factors that you must be aware of:

Type of life policy