According to The Exeter, among those who cancelled insurance, 24% said they did so because they had never made a claim, 14% did not recognize the value of their cover, 12% did not specify their reasons and 5% were unclear about the purpose of the product.
Less than half of UK workers were unaware of the additional benefits included in insurance policies that can be used without making a claim.
Around 40% said they prioritised affordability when buying insurance products, with The Exeter adding that it was “crucial that consumers fully understand the products they are purchasing and the benefits they offer for the price paid”.
The number of workers cancelling policies on the back of higher living costs has nearly doubled from 4% to 7%.
There has also been a rise in those cutting pension contributions for the same reason, going from 4% to 9%.
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Demand for private health solutions has gone up by 11% and cash plans by 5%, which is ahead of life insurance and income protection.
Increase in insurance cancellation is ‘disheartening’
Steve Bryan, director of distribution and marketing at The Exeter, said: “The increase in the number of people who state they have cancelled insurance products due to financial pressures is disheartening but not surprising in the current economic climate.
“More concerning are the number of people who state they have cancelled a policy because they did not see value in the product they had purchased – including those who had not claimed. This highlights the valuable role that advisers play when recommending cover to clients. It also underlines the need for insurers, advisers, and policyholders to build ongoing relationships throughout the life of a policy.
“Frequent adviser reviews of a client’s needs and regular engagement from insurers are key to ensuring that cover remains fit for purpose and that policyholders are fully aware of the benefits offered within their policies.”