WHAT TO DO IF YOU CAN NOLONGER AFFORD TO PAY YOUR LIFE ASSURANCE PREMIUMS

Not everyone is finding it easy to make ends meet in Zimbabwe. NO matter how hard you work sometimes money is not as easy to get. It is always a good idea to cut on spending if this is the case. It’s a pity that insurance is one of those expenses that fall victim when we have to cut our spending. I will have to confess that when I changed jobs and got a pay cut I went and cancelled my life assurance policy because I felt I could no longer afford it. But the reasons I had taken life assurance had not fallen off. The need for life assurance is still there. I still need my family to be taken care of if something unfortunate happens to me. Your family too are likely to get into a financial emergency if you pass on especially if you have mortgages and loans that need to be paid and living expenses that you were contributing.

I regretted my move to cancel my policy when I spoke to a Financial Advisor from one of the top  life assurance companies in Zimbabwe who told me I had plenty of options, even when I could no longer afford to pay premiums, to keep my policy alive before I could cancel it. So before you think of making the same mistake I made consider the following;

1.Getting a premium holiday.
So it is part of life to cut on spending at some point. However, because life insurance companies (only the good ones) have a provision contained in some of their policies that allows you to cease premium payments in the event of economic hardship, you do not have to worry about canceling your life assurance policy. The period could be anything from a month to a year! If you are wondering how they will make up for the premium you did not pay in that period, I did too!  The life assurance company can simply ask you to pay for the months you skipped when things get better or they could just collect premiums from the accumulated cash value within the policy during this period. So a premium holiday can just allow you to find alternatives on when and how you are going to continue paying your premiums without necessarily discontinuing your policy.

2. Pay premiums Annually or Termly
Before I changed jobs I had the capacity to pay premiums for my life assurance for the whole year from one month’s salary but I still chose to pay on a monthly basis. This is because I wasn’t aware of what was in the future. Had I paid for the whole year, I was simply going to relax and not run to cancel my policy when my pay was cut. My uncle Teddy is a farmer and he makes budgets for his whole year after selling his produce and that is usually once a year. It can be difficult to stretch the money he gets as single payout and pay it monthly. So instead of canceling your policy when you can no longer pay your premiums, why not pay your life assurance premiums in advance for a whole year or a term when you still can?

3. Reduce the cover
Most insurance companies will allow you to reduce the value of your life assurance if you can no longer afford high premiums. This will allow for the reduction of the premiums without completely losing the policy. If for example you were paying $20 per month for a $20,000 benefit, you can reduce the benefit to $5000 and start paying $5 per month.

4. Pay Premiums with Cash-Back
Good life assurance companies in Zimbabwe all offer cash back on the policies. This is more of a celebration that you are still alive and it is usually paid once in 5 or so years. An insurance company might give you back the premiums you paid for  6 months or more. This means that instead of spending it you can put it back into your policy and relieve yourself from paying premiums for some months. This is more like a businessperson putting back his profits into his business to grow it and reduce the impact of his expences.
Ask for help

If all the tips cannot help you, and you still cannot find a way out, maybe you have to take a step and ask for help. You could have people in your circle you go out with every single weekend, if they are your true friends and you ask them nicely they can pay your premiums for you whist you are in that financial emergency. This is a true form of friendship, love and responsibility.

Like any other insurance policy make sure you read and understand the policy that you have. The policy I had allowed me to skip 6 months without paying premiums but because I thought I know it all, I never read it and it cost me. So stop before you make a decision and get adequate knowledge which will help you to make thorough decisions. However, if you are really in financial stress you can always let your policy lapse and buy a new one when things get better. Do not put yourself under too much pressure, but if there’s less important things you can forgo to keep your policy running do it!