While many people are underinsured, some of us are carrying more insurance than we need. We may have too much or the wrong kind. There are times when dropping your insurance coverage makes sense. Making unnecessary premium payments is wasteful. Always seek to make the best use of your financial resources.
Consider these two situations:
1. Term life insurance. This type of policy was only intended to cover you for a particular need It might be until your youngest graduates from university or until your house is paid off.
If your circumstances have changed and you no longer need the policy, letting go of it might be a smart move. Apply the monthly premium to something else, such as a policy reflective of your new needs, such as a clean up fund or funeral plan. Consider an option where the cost of cover remains fixed and does not rise with age.
2. Over-insured. Do you carry too much insurance? It happens, especially if you ever dealt with an unscrupulous insurance adviser. It’s important to review your level of coverage each year with a professional you trust. You might be able drop some of your coverage or redirect the payment to a cover for something more appropriate to your current situation.
In a world with seemingly unlimited insurance opportunities, there are times when it makes sense to drop certain policies and use the money for other purposes. Sometimes dropping your insurance is the financially responsible thing to do. Determine if all your insurance policies make sense for your situation and adjust accordingly.