If you’re looking for ways to save money, you might be considering cutting back on your insurance cover. However, while this could save you cash up front, it may prove to be a costly mistake in the long term. Here are three reasons why it doesn’t make sense to scrimp on financial protection.
1) You can’t eliminate risks
It can be tempting to think that as long as you’re careful, you won’t put yourself in a position where you’ll need to make an insurance claim. Following this logic, you might become convinced that you only need the bare minimum of cover, or you don’t require any financial protection at all in certain areas. However, this is a foolhardy approach to take with your finances. The fact is, no matter how cautious you are, you can’t completely eliminate risks. From driving accidents that aren’t your fault to burglaries and unexpected health problems, there are a host of dangers out there.
If you are affected by issues like these, you’ll need suitable insurance in place to protect your finances. Bear in mind that there are ways to reduce your costs without compromising your level of cover. For example, specialists brokers like Chill Ltd can search the market on your behalf to find competitive offers. Saving money in this way is a much safer option that simply reducing your protection.
2) Short-term savings can lead to long-term financial disaster
It’s true that by cutting back on your level of cover, you can make short-term savings. However, your financial gains may prove to be short lived. For the sake of reducing or eliminating relatively small monthly premiums, you run the risk of incurring costs that could decimate your finances. Whether you experience problems with your property, you’re involved in a serious car accident, you lose your job or you become sick, if you can’t make a claim, you could find yourself in financial hot water.
3) You’ll have to live with the worry of potential losses
As well as putting your money at risk, skimping on insurance can take its toll on your peace of mind. Knowing that you’re always in danger of facing major bills can be extremely stressful. Even if you’re not always conscious of it, your precarious financial position may always be at the back of your mind, and it could increase your anxiety levels.
Given these clear disadvantages, it’s easy to see why experts advise against cutting back on insurance cover as a short-term means of saving cash.