Women are most affected with 28 per cent of those surveyed claiming inflation, currently 10.4 per cent, is making it difficult to maintain their life insurance cover compared to 17 per cent of men.
The study of 1,000 over-50s was carried out by financial mutual Scottish Friendly.
More than 55 per cent of respondents with an over-50s life insurance plan said they took out a policy to cover funeral costs, while 46 per cent did so to provide financial support for their family in case of their death.
Meanwhile, just under one in 10 started a plan to help pay off their mortgage.
By discontinuing premiums households risk not receiving any financial benefit from their life insurance policy when they die.
Jill Mackay, head of marketing at Scottish Friendly, said: “Inflation has increased again after falling for three consecutive months and continues to affect household budgets.
“Dealing with price rises is particularly difficult for those on fixed incomes, such as those in retirement.
“However, while it might be true that not all types of insurance are indispensable, it is important to think carefully before cancelling life insurance cover.”
‘More important than ever to have protection’
Some providers will pay out a proportion of premiums on the death of the policy holder if they have stopped making their payments during their lifetime. This feature is called reduced benefit and is not offered by all providers.
For families to receive a proportion of the premiums, the policyholder must have paid into the policy for at least two years.
Policyholders who are considering stopping paying their monthly premium should contact their provider to find if reduced benefit is a feature of their plan first.
Chris Sykes, technical director at Private Finance, said: “Arguably it is now more important than ever to have protection because if you were to cancel your policy and die tomorrow what position could this leave your family in? By cancelling your premiums you’re leaving your family with the financial burden you couldn’t manage when you were alive.”
He adds: “There are forms of insurance like income protection and critical illness which are also important not to cancel if you can afford to keep them. These policies will protect you financially if you’re too ill to work.”
Before cancelling a premium customers are urged to get in contact with a broker to review existing insurance policy premiums.
Customers can call their provider to see if payment arrangements could be made, find out if they have a reduced benefit feature and examine their household budget and bank statements to see if other cutbacks can be made.
Customers could also face higher premiums if they restart a life policy at a later date.
