More people cancelling insurance policies

The recession and the global credit crunch have had a profound effect on the finances of many households, and families have had to make all sorts of cutbacks in order to cope with the changes in their financial situations. However, worryingly it seems that some have now resorted to cancelling important insurance policies in order to save money each month.

According to research carried out by Sainsbury’s Bank a rising number of people have cancelled life and home insurance policies to save money on the cost of premiums, and this could end up being disastrous for the families in question if the need to make a claim arises.

It is estimated that close to one million customers have either cancelled or at least reduced their level of home insurance over the past twelve months in order to cut costs. Around 300,000 policyholders have also cancelled their life insurance policies in order to save money on their monthly outgoings.

An official from the Association of British Insurers said: ‘It’s a false economy. Insurance may seem expendable when family budgets are being squeezed, but people should think long and hard about the most sensible places to make savings rather than rashly cancelling essential cover.’