There are seemingly hundreds of different types of insurance available to the average person these days. From gadget insurance to pet insurance to specific household appliance insurance, it’s more than possible for a single household to find themselves paying for ten policies – or even more – every month.
For the most part, insurance policies are always worth the investment, allowing you to protect your finances against unexpected costs. However, if your budget is tight, you may find yourself eyeing each policy you hold and wondering if it could be cancelled to provide a temporary reduction to your outgoings.
While cancelling any insurance is never ideal, the fact remains that sometimes, insurance policies are all people have left to cancel when their budget is struggling. As a result, we thought it’d be helpful to discuss which policies you always need to keep, and which you may be able to cut if needs be.
First and foremost, it’s essential to establish the essential insurance policies; the ones that you should never, ever cancel as a cost-cutting measure.
- Car insurance. Car insurance is usually a legal requirement, so if you intend to keep driving your vehicle, you’ll need to have a policy in place.
- Health insurance. Health insurance is always an essential, allowing you to access the healthcare coverage you and your family need to remain well.
- Critical illness insurance. If you’re wondering what is critical illness insurance, the answer is simple: it’s a specific type of coverage that is designed to pay out a lump sum if you are diagnosed with a severe health condition. This type of policy is essential as it ensures financial obligations – outside of healthcare treatment – can be met when dealing with serious illness.
The next tier of insurance policies should only be cut if you have no other options available for easing your monthly budget:
- Property insurance. Property insurance is incredibly important, but as it pertains to a building rather than human health, it can be cancelled if necessary.
- Pet insurance. Many vets will accept payment plans in place of insurance, or you could consider options such as Care Credit for pets if your pet requires medical treatment when coverage has lapsed.
- Unemployment insurance. For those unfamiliar with what unemployment insurance is, it’s a simple policy that is designed to cover your expenses if you – or your partner – become unemployed. While this type of policy provides valuable peace of mind, if your budget is tight, then it can be cancelled until your financial outlook begins to improve.
The low-hanging fruit
The following are types of insurance you should cancel first if you’re looking to save money on monthly outgoings:
- Travel insurance. Rather than paying for an annual policy, switch to single policies that only cover you for each trip you take.
- Cell phone insurance. Cell phone insurance is undeniably useful, but it’s lower down the priority list, so can be cancelled if needs be.
- Appliance insurance. If any appliance fails, there is usually a workaround that you can use instead; for example, using a laundrette if your washer breaks down, so if you need to find space in your budget, these types of policies can be cancelled.
Cancelling insurance policies should always be a last resort, but if you do find yourself having to contemplate such action, following the above advice should help ensure the most important policies are always preserved.