As a young 20-something, you generally prioritise paying off your student loans, buying a car, moving into your own apartment and kick-starting a career. Life cover is not on your bucket list. However, there are numerous arguments to be made for buying life insurance at a young age – the biggest advantage being the price of the premiums.
Petrie Marx, Product Actuary at Sanlam, says that millennials put things like life insurance off. “Generally, they’re buying homes, having children and getting married at much later stages in their lives and they generally also postpone buying insurance. There’s a common perception that life cover is pricey and irrelevant, which makes it a grudge purchase when there are groceries, rent and other bills to pay. Plus, debt’s a huge issue in this country, with many young people saddled with significant student loan repayments.”
Despite this, Marx says that life cover is important. Here are the reasons – and there are some benefits – to get life cover in your 20s.
Lower premiums
Age really is on your side in your 20s. In general, young adults enjoy better health which will equate to lower monthly premiums with no exclusions. Multiple factors impact insurance premiums, but young people are considered less likely to claim, which makes them a lower risk to insure.
For example, a healthy, non-smoking female could expect to pay around R190 in monthly premiums for R1 million life cover at 25. If the same individual took out the same level of cover at 45, she could possibly pay around R460 per month, if she maintained a healthy risk profile. By purchasing insurance at an early stage in life, your insurance will stay intact as per your policy wording – even when the state of your health changes as you get older. If you wait to buy insurance at a later stage in your life, you are likely to face higher premiums, or have exclusions.
You need to protect your assets and income
As soon as they start a career, young people tend to think of physical assets first – buying a car, or investing in property. However, as a young person your long-term income earning potential is really your biggest asset and has to be protected with sufficient life cover.