Is Life Insurance Necessary While I’m Between Jobs?

Everyone, including those who are unemployed, need life insurance to protect their loved ones.

Whether you’re employed or not, you have financial responsibilities that can’t be ignored. Life insurance is one of those responsibilities – and it’s actually more important for those out of work than those in work to maintain their policy.

Below we’ve answered the most common life insurance questions those who find themselves out of work have.


Q: I’m considering cancelling my life insurance policy to cut back on expenses. Is this a good idea?

Not necessarily. Life insurance policies do not have a savings component, so unless you opt out of your policy within the 30 day cooling off period, cancelling will mean that you lose all of the premiums you’ve paid so far.

Unemployed people actually have a greater need to protect their family’s finances than their employed counterparts. This is because, if money is already tight, then if something were to happen to you the results would be even more financially devastating for your family.

If you think you can’t pay your premiums while out of work, imagine how much harder it will be for your family to pay for funeral expenses, mortgage repayments and bills during financially hard times.


Q: What can I do if I really can’t afford my life insurance premiums while I’m unemployed?

The last thing you want to do is abandon a policy that you’ve been paying for years or even decades.

Many insurers are happy to help you through hard times by allowing up to a 3-month freeze period where you’re not required to pay your premiums.

You can use this period to look for work, catch up on other bills that are due and get by with one less financial stress to consider!

Whilst it is obviously crucial to not allow your insurances to put yourself under financial strain, it is important to weigh up all options before making any changes.


Q: Are there other ways I can reduce my premiums while I look for work?

There are several ways you can lower the cost of your life insurance while you’re unemployed. These include:

  • Reducing your level of cover
  • Comparing your current provider’s rates with the rates of other, more competitive providers
  • Adopting a healthier lifestyle by losing weight, quitting smoking or cutting back on your alcohol consumption
  • Changing to a life insurance policy that requires a medical as opposed to a non-medical policy which will almost always compensate for the lack of personal information with higher premiums

Find out more ways to reduce your premiums here.


Q: Can I get approved for a new life insurance policy while I’m unemployed?

Sometimes life insurance providers are less likely to approve policy applications made by unemployed people. Life insurance will typically be limited to a certain level while you are looking for work while disability covers will not be offered based on your own occupation.

This is a rare scenario, however, and most life insurance providers will consider more than a few factors before determining if you’re eligible to take out a policy, including:

  • How steady your history of employment is
  • How long you’ve been unemployed
  • How employable your skills are
  • How actively you are pursuing employment
  • Your credit history
  • Your assets
  • Your savings
  • The level of coverage you’re applying for

If you have apprehensions about whether you’ll be accepted given your personal circumstances, it’s a good idea to apply for a lower level of coverage and then increase this level of cover when you commence working again.


Q: Will cancelling my life insurance affect my ability to reapply down the track?

It is possible that cancelling now can affect your ability to get the same rate later down the track – especially if you’ve held your policy since you were young.

This is because the older you get, the higher the premiums you’ll be charged. So, if you’ve locked in a great rate when you’re young, it’s in your financial best interest to keep that policy when you’re older. This typically refers to policies that have a ‘level premium’.

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