It’s not a slog to cancel your insurance cover nowadays, is it?
All you need to do is pick up your phone and instruct the call centre agent on the other side to make you an “ex-policyholder” or reverse the pending debit order that’s lodged against your account using your smartphone banking App with an aggressive swipe of your index finger.
It’s an “easy-on-easy-off” type of culture we live in, and that’s being driven by the speed at which we can access information, services and goods via the internet.
Think about it for a second…
- You can have your groceries delivered straight to your front door in 60-minutes.
- Then book an overseas holiday to Berlin straight after packing your chow into your fridge.
- You can take out life insurance once your flights have been confirmed.
- And file your annual tax return before you make dinner, 2 hours later.
The mundane list of to-dos that might have taken a week to sort out two decades ago, can be scratched off your virtual “be more efficient” list on your App in an afternoon.
There is only one real issue with moving at lightning speed – sometimes (and most of us can attest to this) things fall through the cracks…
Cancelling your insurance on a whim because you want to save a few bucks and then forgetting to get the cover back on again at a later stage, happens all the time and the consequences can be devastating.
Let’s take car insurance for a second.
If you own a vehicle that’s financed through the bank, it’s compulsory that you have comprehensive car insurance in place, because the car isn’t yours until it’s fully paid off. The bank can force you to take out a policy while the car is on their dealership floor, but they have no way of making sure you pay the premiums on time, each and every month, and they certainly don’t have enough ‘car detectives’ running around making sure you never cancel your cover.
What would happen if you cancelled your cover to save R1500 this month and never reinstate the cover?
If the car was damaged during this time, you would be liable for the repair costs. If a third party was involved in the accident, you might be liable for their repair costs as well. Worst of all, you could find yourself in a situation where your vehicle gets stolen and you still owe the bank a couple of hundred grand, with interest accruing each month as your vehicle finance loan isn’t yet paid off.
Insurance has been commoditized and most people look at it like they do a can of soup on a shelf in a supermarket (the internet is the super-market, and the company websites and advertising campaigns are the shelves). The thorough and sound advice, offered by an insurance professional, has somewhat fallen by the wayside as more companies ask the consumer to arm themselves with the relevant information to make informed decisions.
Now, let’s look at life insurance quickly.
Imagine you cancelled your life insurance to save a few bucks this month and after 8 months you realized you hadn’t reinstated it again. You quickly phone an insurance company to get a quote and they insist on you going for a few blood tests, because that is the mandatory level of medical examination they require.
You haven’t let your spouse know that you let the policy premiums slip, so off you go to get the medical tests completed.
A few days pass and the insurance company calls you to let you know they can’t offer you the cover at the quoted rates and that the results of the tests have been forwarded to your doctor.
In a flat panic, you call your GP who asks you to come in to see him, and after having more blood tests, you find out you have a chronic illness like high cholesterol or diabetes and now your monthly life cover premiums will cost you way more than they did when you cancelled your original policy. This is because the insurance company will apply a health loading cost to your quoted premium.
These types of insurance mishaps happen to regular people all over the country every day.
We understand that times are tough and every cent counts. Family members, friends and work colleagues are all struggling to keep their head above water at the moment. But try not to make reckless decisions with your medical aid, car, home and life insurance.
If push comes to shove and by ‘shove’ we mean you want to free up some money in your budget by reducing your insurance spend each month, rather downgrade your plan or reduce your life cover benefits to a more affordable premium, in the short term. Try to avoid cancelling policies with the view that you will just restart them when your circumstances improve.
If you have spent any lengthy period of time knocking about on this planet, you will know that the universe has a way of knocking you back with something, when you least expect it.
Stay insured, even in tough economic times.
Until next time
The Wise About Life Team