The main driver of business insurance policy lapses, including both business and personal insurance cover, is the financial hardship that consumers are feeling with as a direct result of economic factors including the rising price of basic goods and services which include everything from electricity to transportation.
Data from ASISA – the Association for Savings and Investments South Africa shows that in 2012, 4.6 million consumers let their business insurance policies lapse – this amounted to R7.3 billion – and was primarily due to consumers not being able to keep up with their monthly premiums.
It is no small secret that on the whole, insurance service providers have had an ongoing battle with continuance and persistency; persistency being described as written policies that remain in force without any interruptions.
Business insurance service providers have their focus on an effort on ensuring that they pro-actively engage with their customers where they are experiencing the pressure and are willing to maintain as well as improve on their persistency levels and delivery of excellent products.
When business owners and private individuals start feeling the financial pinch and pressure, many consumers simply opt out of paying their insurance premiums in favour of other more basic needs.
This might seem like a quick solution to get out of a financial tight spot; take note that when applying for insurance could prove to be a major stumbling block at a later stage.
This is what you need to know if you decide to let your business insurance policy lapse:
- The cost of future cover could prove to be significantly more expensive – factors such as health in later life – general increases in premium rates for new business, or even just being a little older will affect your premiums.
- The difference between what you originally paid for your policy and what you will be obligated to pay now could prove to be ominously higher.
When you take out business insurance you have to read the fine print and understand the terms and conditions fully so that you will be able to continue to pay the premiums.
Remember that there are numerous insurance policies that you can buy to protect your income and your business so that even when you are no longer in a position to continue paying your premiums these will be taken care of.
It is imperative that you continue paying your insurance premiums and to take out cover in the event of disability should you no longer be able to continue to pay premiums during times of financial difficulties.
Take careful note of the add-ons on offer by insurers permit clients to pay something extra into their policies – this further amount is kept as an investment which is perfect for drawing from when times are hard and the client is in a financial squeeze.
Ensure your business insurance policy does not lapse as this could cost you dearly down the line – this applies to both personal insurance as well as your business insurance.