The credit crunch has had quite a dramatic effect on many people’s lives in the UK, particularly with regard to their financial situation.

Due to the rising cost of living and high mortgage and personal loan costs, many household budgets are being stretched to the limit and in some cases beyond and because of the tighter lending restrictions which have been imposed by the majority of banks and building societies, many of these home owners are unable to re-mortgage their home to obtain a better deal on their home loan in order to ease their financial worries.

Predictably, many of these people are being forced to make cut backs in their lifestyle and regular outgoings and alarmingly, almost half of the population of Britain are planning to stop the plans and policies which offer them financial protection on their loans and family lifestyle, along with savings plans, according to new research which has just been published by American Express Insurance Services.

The survey was conducted across a range of 2000 individuals in the UK and out of those interviewed, 44 per cent said that they were planning to stop their family savings plans.

More worrying than this is the fact that 27 per cent of people are planning to stop paying their health insurance policies and 30 per cent of individuals intend to cancel their payment protection policies on their mortgages and other loans, at the exact time when they are most likely to require this type of insurance due to increasing levels of unemployment and the threat of recession, which in turn can lead to health problems through financial stress.

It is a false economy to cancel protection plans, particularly when we are in a time when they could well be needed to keep the roof above the family’s heads. What is the point of paying premiums for several years and then cancelling the plan once you actually require the benefits it offers.

Certainly it is sensible to cut back on the non essential luxuries in life, but family and loan protection plans should be considered as important as maintaining the repayments on your mortgage and other loans.