These conversations happen regularly but last week an aged accountant asked me for an opinion about whether he should keep a life insurance policy he has had for many many years.

When I asked him about what kind of financial strife his demise would now cause, he began listing many assets, which included a whole block of flats! So the insurance payout wasn’t really needed anymore. Any consideration of continuing this death cover was merely gambling – a bet between the insurer and himself on what his body is going to do.

What we are regularly explaining to people is that the approach to insurance shouldn’t be about – “I’m worried I might get this horrible disease that runs in my family”. It should be about – “If I do get that horrible disease, what is the financial hole created?” When we are up to our eyes in debt and small children, the financial hole is a lot larger than when we are 65 and own a block of flats. In fact, when you win Lotto, the first thing you could do would be to cancel much of your insurance.

So the best way to save money on insurance is to accept your adviser’s regular offer of a review of your circumstances and only hold the insurances (especially death cover and income protection) that will fill the hole that’s been identified.