When you are in your early twenties and life, with all its promise, stretches ahead of you, life insurance is the last thing on your mind. It’s difficult to understand why you need insurance until you realise that life does change, that you don’t stay young - and may not stay healthy - forever. Ahead of you is a career, marriage, children - events that make financial planning and life insurance a necessity.
The fact is, says Angela Mhlanga, Head of Bancassurance SA at Standard Bank, that the vitality and enthusiasm of youth focuses people on what they want rather than what they need, so spending money on life insurance seems like a hard-to-justify ‘grudge purchase’.
“Along with the belief that life insurance is not really necessary in your early twenties, go the convictions that it is expensive and it is easier to save money where you can get it quickly and easily,” Ms Mhlanga explains. “What should be considered is the positive side of taking out a life policy when you get your first pay-cheque.”
According to Ms Mhlanga, the reasons why you should think about life insurance even when you are just starting out include:
The cost of the monthly premium
The younger you are when you buy a policy; the less it may cost. The earlier you take out your policy, the less of a dent the payments will make in your disposable income. Time is on your side, so you can pay what you can afford and relax, knowing that you are covered.
It’s a great way to get into the savings habit
An insurance premium forces you to consider your long-term future, ensuring that you get into the habit of putting a bit away that will help you (and your family) should the unforeseeable happen.
You have the opportunity to choose what you need
Not all policies are the same but because you are younger, you may have fewer limitations on what cover you can apply for, especially if you’re in good health and you have very few bad habits, e.g. smoking. While you may not necessarily see the need right now, you may want to consider a policy that covers you if you become permanently disabled and cannot work. Being young does not guarantee that you will never be involved in a serious accident.
“Some people believe that life insurance is too complex and the choices are too vast,” explains Ms Mhlanga. “However, in South Africa companies are committed to keeping wording simple, providing straight-forward products and product information which offer customers the opportunity to make informed decisions”.
“When you decide to get a policy, select a company that you trust, then check that the company is authorised to sell and service the products,” concludes Ms Mhlanga.