What to know before you cancel your life insurance

DATA from the Association for Savings and Investment South Africa (Asisa) reveals that South African life insurers paid out R39.9 billion in death claims in 2023, emphasising the vital role these policies play in securing families’ futures.

- ETIENNE FOURIE

However, life insurance is not a one-size-fits-all solution, and misconceptions about its value, cost, and structure are rife.

Many policyholders believe they can simply pause and restart their cover or rely solely on employer-provided benefits or funeral cover. Yet with South Africa facing a life and disability cover gap, the financial risks of cancelling may be far worse.

Life insurer, BrightRock, answers five top questions consumers should ask before cancelling their life policies:

1 “I am thinking of cancelling my policy. Can I just get a new policy later when I can afford it again?”

It may seem like a good idea to cancel your life cover now and restart it later when finances improve, however, this decision isn’t wise. Life insurance premiums are largely based on two things: your age and your health at the time you take out the policy. The younger and healthier you are, the lower your premium. Once you cancel, you lose the underwriting status you had when the policy began, which means if your health changes, you may not qualify for the same cover at all, or it might cost you significantly more.

Developing health conditions such as diabetes, mental health-related illnesses, gaining or losing a significant amount of weight, a mild heart attack, stroke, or starting smoking will position you as a high-risk client. This will make it harder or impossible to access life insurance in the future.

If affordability is the issue, ask your provider about benefit adjustments or premium reductions. Many life insurers offer flexible options that allow you to reduce your financial commitment without fully cancelling your policy.