Continued high inflation is causing a significant number of over-50s to reconsider their life insurance policies, research has suggested.
A survey of 1,000 over-50s by insurance and investment mutual Scottish Friendly has shown that 22 per cent of customers are thinking about cancelling their monthly payments because of the rising cost-of-living.
Women were more impacted, with 20 per cent of those with an over-50s life insurance plan considering no longer paying, compared to 17 per cent of men.
The rise in prices has been particularly difficult for those on fixed incomes, such as retirees, according to Scottish Friendly’s head of marketing Jill Mackay.
“Inflation has increased again after falling for three consecutive months and continues to affect household budgets,” she said.
“When times are hard, people will naturally look at ways to save money by cutting back on their spending, and protection may be one of the areas in which they look to do so.
“However, while it might be true that not all types of insurance are indispensable, it is important to think carefully before cancelling life insurance cover.”
Mackay warned that if customers choose to stop paying into their policies then they risk ending it and may not end up getting back what they paid in.
“The best over-50s life insurance policies do offer some payment flexibility and customers could be entitled to a proportion of their cash benefit if they stop paying in, but it’s vitally important to speak to your provider first before making any final decisions,” she added.
The rate of inflation unexpectedly sped up in February to 10.4 per cent.
Of those surveyed by Scottish Friendly, 57 per cent said they took out an insurance policy to cover funeral costs, while 46 per cent did so to provide financial support to their loved ones in the case of their death.
Meanwhile, less than one in 10 (9 per cent) started a plan to help pay off their mortgage.
The survey also revealed that payment certainty and lower premiums are two of the biggest draws to potential new customers.
Nearly a third (35 per cent) of respondents said the most important feature they would look for in an over-50s life insurance plan would be guaranteed cover.
This was closely followed by a low monthly payment (31 per cent) and fixed monthly premiums (27 per cent).
jane.matthews@ft.com
