With fuel price and VAT increases adding to the pressure on household budgets, you may be tempted to ditch some insurance cover. But allowing policies to lapse by not paying the premiums - without reviewing whether it's necessary cover or not - exposes you to a potential financial disaster. Insurers suggest you find other ways of reducing your costs. Lizl Budhram, the head of advice at Old Mutual Personal Finance, says consumers often think that they are not getting any immediate value from a life assurance policy and that they can cancel a policy now and start it again later when they are more cash flush. But, she says, they forget that later the premiums may cost more because you are older and potentially a higher risk to the assurer or, if you have developed health problems, you may even be uninsurable. Susan Steward, spokeswoman for short-term insurer Budget Insurance, says often people choose to cancel their insurance when they are looking for ways to cut down their monthly cos...

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