Of those who have scrapped policies to cut costs, 15% axed their car breakdown cover and 15% dropped private health and dental insurance, putting these at the top of the cancellation list. However, 13% cancelled a life insurance policy, making life cover the third most likely to go.
Consumers seem to consider their home contents insurance to be more of a necessity though. Of those who have cut back, only 6% decided to save money by ditching contents cover. And, unsurprisingly given current concerns over mortgage affordability and job security, mortgage payment protection insurance is also one of the least likely to be dropped - only 7% of those who have cut their commitments have cancelled this protection.
The majority, 86%, of those who have cancelled insurance policies or pension contributions in a bid to save money actually saved themselves up to £50 a month. However, one in ten (10%) saved between £51 and £100 a month.
These savings may be enough to help consumers through the current economic crisis, but for some there may be a longer term price to pay. One in ten people (12%) who have looked to save money in this way have stopped making pension contributions. If they are unable to make up the shortfall in the future when their finances are back on an even keel, they may find themselves paying the price for the credit crunch for a long time to come.
Ashton Berkhauer, insurance expert at uSwitch.com, says: "With money getting tight, it's not surprising that consumers are looking for ways to cut their spending. However, there's a big difference between cutting down on luxuries or your weekly shop and cutting out on life insurance or pension savings. The potential impact on you or your family finances if you get it wrong could be huge and long lasting, so it's important to go into it with your eyes wide open.
"The key thing to consider before cancelling any policy is whether it still meets your needs. You should then look at whether it is cost effective, whether the cover is being duplicated through another policy or a workplace benefit and, more importantly, what the implications are of getting rid of it.
"You still have options even if you cannot afford to ditch your cover - you could shop around for a cheaper provider or see if you can reduce premiums by increasing the excess, lowering the payout or increasing the length of time before payout. Reviewing overall levels of cover, for example removing accidental damage cover from your home insurance, could also cut the cost. With a bit of homework you may still be able to keep yourself and your family fully protected, while reducing the amount you pay - a good compromise in today's uncertain times."
