Insurance: The Shield Against Financial Stress—Why You Need It Most in Tough Times
Insurance is not an expense—it is a financial plan to mitigate risk. Yet, when faced with cash flow issues, many people make the mistake of cancelling their insurance policies to reduce expenses. Ironically, the time when finances are tight is when insurance is most crucial.
The real question is: Can you afford NOT to have insurance when financial stress is already present?
Why Insurance Matters Even More in Tough Times
When money is tight, the natural instinct is to cut costs. But consider this—what if during a period of financial strain, an unexpected medical emergency, accident, or job loss occurs? Instead of easing financial stress, cancelling insurance can make the situation even worse.
Here’s why:
1. Medical Emergencies Won’t Wait for a Better Financial Situation
A hospital bill can easily reach tens or even hundreds of thousands of ringgit. If you cancel your medical insurance to save a few hundred ringgit a month, how will you afford RM50,000-RM100,000 for emergency surgery or treatment?
👉 Having insurance = Immediate financial protection
👉 Not having insurance = Using savings, taking loans, or even selling assets
In reality, paying a small premium now is much easier than trying to find a huge sum when an emergency strikes.
2. Critical Illness Can Impact Income for Years
If a major illness like cancer, stroke, or heart disease occurs, it’s not just the medical bills that need to be covered. Income stops because working may no longer be possible.
Cancelling critical illness insurance means:
❌ No income replacement when you’re unable to work
❌ Added stress of paying for daily expenses while recovering
❌ Risk of debt accumulation due to loss of income
Instead of cancelling, review the policy and adjust the coverage if needed, but don’t remove this crucial safety net completely.
3. Life Insurance Protects Your Family’s Future
If something unexpected happens to the breadwinner of a family, will the family be able to cope financially?
Cancelling life insurance during financial struggles is one of the biggest mistakes. This is the time when dependents need security the most, ensuring that outstanding debts and daily expenses are covered if the worst happens.
A family already facing financial difficulties should not have to deal with additional burdens like:
❌ Unpaid home loans leading to losing the house
❌ Education costs for children left unfunded
❌ Daily living expenses without a backup plan
4. Financial Stress Worsens Without a Safety Net
It’s understandable that during financial difficulty, cutting expenses seems necessary. However, cancelling insurance may only provide short-term relief but lead to long-term financial disaster.
Think of insurance as an emergency parachute:
- You don’t need it every day.
- But when you do need it, it is absolutely critical.
What to Do Instead of Cancelling Insurance?
1️⃣ Review and Adjust, Don’t Cancel – If premiums feel heavy, talk to your financial planner. Adjust the coverage or switch to a lower-cost plan instead of cancelling completely.
2️⃣ Prioritise Essential Coverage – Ensure you at least keep medical, critical illness, and life insurance, as these are the most important during financial stress.
3️⃣ Think Long-Term, Not Just Monthly Expenses – Saving RM200 now by cancelling a policy could cost RM200,000 in the future when an emergency happens.
4️⃣ Seek Alternative Solutions – Consider restructuring debts, budgeting differently, or cutting non-essential expenses before cutting insurance.
Conclusion: A Safety Net You Cannot Afford to Lose
When finances are tight, insurance is the last thing you should cancel. It is designed to protect you from financial ruin, especially when money is already an issue.
✔ Medical emergencies can happen anytime – insurance ensures you don’t go into debt.
✔ Major illnesses stop income – critical illness insurance provides financial breathing room.
✔ Family’s future matters – life insurance ensures they are secure, even if you’re not there.
👉 The real financial burden is not the insurance premium—it’s the risk of NOT having insurance when you need it most.
Before making any decisions, ask yourself:
💡 If something happens, can I afford the financial impact without insurance?
The answer is often no—which is why keeping insurance, even during financial struggles, is one of the wisest financial decisions you can make.
