Are you thinking of reducing your personal protection insurance?

Are you thinking of reducing your personal protection insurance?

Are you thinking of reducing your personal protection insurance?

The UK economy has been under pressure over the last decade after facing several financial challenges. While there have been slight signs of improvement over the last few months, the short-term outlook is still unclear. At the same time, inflation continues to fall from the double digits seen in 2022 and 2023 and is now less than wage inflation. Consequently, real household incomes are now starting to rise again.

Is it time to reduce your personal protection insurance, or is it prudent to retain this safety net?


Understanding personal protection insurance

As with any insurance policy, the different variations of personal protection insurance offer a financial safety net in uncertain times. These types of policies come in various forms and address many scenarios.


Life cover

Life cover is often used to ensure loved ones are protected and provided for in the event of your death. Along with providing peace of mind, life insurance can cover numerous liabilities such as mortgage repayments, school fees, and maintaining your family’s standard of living. The premiums will depend upon age, health, and the amount of cover you require, which is something that our advisers can help with.


Critical illness cover

Like so many insurance policies, critical illness cover is one of those products that are only really appreciated when we need it most. This is a popular type of insurance policy across the board but is often of greater interest to the self-employed. Policyholders will receive a lump sum cash payment if diagnosed with a critical illness, providing financial assistance to cover medical care, living expenses, etc.

Income protection

Income protection policies are similar to critical illness cover in that they are designed to pay out if you cannot work due to illness or injury. The main differences are that income protection policies pay out regular income until:-

  • You can return to work
  • The policy ends
  • You retire
  • Or die

The terms, premiums, and payouts are flexible, and the timing can also be staggered to coincide with the end of employment sick pay.


Reasons to consider reducing your personal protection insurance

There are numerous reasons why you may consider reducing your personal protection insurance, such as:-

  • Loss of employment
  • Reduced income
  • Change in circumstances
  • Improved outlook

Many people may be surprised to learn that it is not just those in financial difficulties who may consider reducing or cancelling their personal protection insurance. Very often, those experiencing an increase in their income may see the cancellation of personal protection cover as a means of saving money, deeming the cover unnecessary. 


Leaving yourself financially exposed

Whatever your situation, it’s essential to recognise these policies for what they are: protection against unexpected events. There may be genuine scenarios where cover overlaps, and adjusting the terms or removing one policy would make perfect financial sense. You may have paid off your mortgage, removing a potentially significant debt on your death, or your children may have left home and are now financially independent. 

Correctly structured protection policies cannot only give you invaluable financial support but also priceless peace of mind. It’s important to remember that wealth management is as much about protecting your assets as it is about increasing their long-term value.


Regular reviews

You should review your investments and broader finances regularly, and these reviews should take into account protection policies such as those listed above. This allows you to identify shortfalls and overlaps, and there may be opportunities to amalgamate insurance policies to enhance cover and provide greater value for money. 

It’s doubtful that the situation when you initially took out these policies, perhaps in your 20s and 30s, remains the same in your 40s, 50s and beyond. However, this is something you can discuss with your financial adviser.



Whether you are struggling to cover personal protection insurance premiums or your financial situation has improved, it’s essential to approach changes in protection insurance policies with the right mindset. These policies are designed to cover you and your family in unexpected scenarios, such as covering a mortgage debt on your death. 

There are many genuine scenarios where reducing your cover makes sense, as there are situations where it could be seen as a false economy. Please contact us if you would like us to review your protection insurance policies or your broader finances to ensure you have sufficient cover and value for money.

Posted in Insurance