Cutting down on your personal cover often seems ideal when trying to cut costs, however many of these products are intended to cover you in times of need.

A customer survey, done by American Express, shows that many of us will cancel insurance to reduce costs. 27 per cent of the consumers surveyed, planned to reduce their medical insurance and 17% were considering canceling pet insurance.

The chairman of AIS, says that it is worrying when consumers cancel the very products that ensure their financial stability.
Tony Solomon, concurs with this view, saying people should think twice before cancelling, because loss of cover may adversely effect their family and themselves in the years to come. Life insurance and critical illness cover are both too important to sacrifice. If the worst happened and you were to die, or fall terminally ill, then cancelling your cover could leave your family with nowhere to live, he says.

You are advised to talk to your insurer if you are having difficulty paying your monthly premiums, as they may be able to arrange a tempoary reduction in the amount of cover.

The BIBA, says that people do not appreciate what is involved in replacing possessions, if they are stolen or damaged. He advises everyone to take out home insurance, but to look at reducing your cover level, as they may not need every single item covered. For example, contents insurance costs about 149 pounds a year on average, a reduction of 25% maybe possible by cancelling extra options on the policy.

Pet cover may appear to be unnecessary, but without cover you may struggle to pay an expensive vets bill in an emergency. So which policies are you safe to cancel? Referring to medical cover, Solomon says that many people get free health insurance from their employers. However, protection of your family is important. Therefore, it would be advisable to choose CIIC, which pays out a lump sum, rather than mortgage life assurance or health insurance.