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When the rising cost of living stretches your budget to breaking point, cutting expenses is a must! And it’s tempting to cut life insurance premiums to free up funds. But be wary, because your family would be without an important safety net if you cancel your life cover. Work with your insurance company and you can find ways to reduce your life insurance premiums! So, if you think that you can’t afford life insurance, think again! You can – and we’ll show you how.
Understanding life insurance premiums
Life insurance premiums are based on your sum assured and your risk factors such as your age, health and occupation. The higher the sum assured, the higher your premium! And, indulge in an unhealthy habit such as smoking and your premiums will be a lot higher than those of a non-smoker! Many of these factors are within your control, which means there are ways to reduce your life cover premiums, even if you think you can’t afford life cover!
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Solutions to consider when you can’t afford your life insurance premiums
There are two main options to consider when your budget does not allow for your full life insurance premium:
- Reduce your premium
- Free up funds in your budget so that you can afford your premium
Reduce your life insurance premium
You can work with your insurance company or your financial adviser to find ways to reduce your premium so that you at least maintain some life insurance cover. This can include reducing your sum assured, which will reduce your premium immediately. You can also reduce your risk factors if they are high, such as stopping smoking. Your insurer may need you to commit to this for a number of months to be certain that they can classify you as a non-smoker, but the difference to your premiums will be significant!
Top tip: You can increase your sum assured when your budget improves!
Free up funds in your budget
This will involve either cutting or reducing items in your budget, or finding extra funds, such as by starting a side hustle. Cutting budget items is hardest at the start, but once you begin reducing expenses it can be quite liberating because you have more cash! When you are deciding where and what to cut, plan for essentials first, being brutally honest about what is an essential, and then cut down or cut out the non-essentials. A nutritious diet is an essential, brand names and over-catering on the weekend braai is not!
Top tip: Truth About Money, a 1Life Insurance initiative, has a free Cash Crunch course to help you find ways to free up cash when you need it!
Long-term considerations of cancelling your cover completely
If at all possible, avoid cancelling your cover completely! Although this may seem like the best option at a time when your budget just cannot balance, in the long term it means your family doesn’t enjoy the financial stability life cover offers. Because of how life insurance premiums are priced, if you decide to take out cover again when your budget improves, you may find premiums are much higher. This is not only because you are older, but also because your risk factors may have changed, including your health, as there is a higher chance of having a chronic condition such as high blood pressure when you are older.
Good to know: It is easier and usually cheaper to adjust a policy than take out a new one!
Leveraging professional advice
Before you make a drastic decision regarding your life insurance, consult a financial adviser who can guide you through your options and show you the consequences of each option, in the short and long term. Your adviser can also conduct a financial needs analysis to accurately determine how much cover you need, and show you how you can start off with the amount of cover you can afford and increase your sum assured over time.
1Life Insurance’s flexible insurance policies
1Life Insurance has been changing lives for nearly two decades with flexible policies that can be tailored to your needs and budget, with life cover from R300 000 up to R10 million. With benefits such as Guaranteed Assurability, policyholders can increase their sum assured without the need for additional underwriting, other than an HIV test, subject to terms and conditions. You can buy life cover online and save up to 13% on premiums, as well as access and manage your policy safely and conveniently in your own time on the online policyholder services portal and WhatsApp service centre.
1Life Insurance has been voted an iconic brand 2 years in a row in the 2022/2023 and 2023/2024 Ask Afrika Icon Brands Awards and has been recognised as South Africa’s #1direct life insurer in the annual Swiss Re Reports for 11 consecutive years! Our policyholders are always top of mind, and in 2023 and 2022, we had the highest net sentiment in the PWC SA Insurance Index Report. Talk to us today to find out how we can change your life!
Keep your cover and take care of your loved ones
Even when money is hard to come by, your life cover is worth keeping! Some is always better than none, and your family is assured that they have financial stability and funds when they need them most! If you are struggling with budgets and you think you can’t afford life insurance, chat to your insurer or financial adviser who can help you find a solution!