Under 35? Here’s Why You Should Take out a Life Insurance Policy

a young man in his 30s contemplates the benefits of getting life insurance while still young

It's a financial product most young people dismiss, but in fact it tends to be cheaper and more comprehensive for them. Here are some pointers to help you see why you should invest in life cover at your earliest convenience.


Getting a head start on life cover, a commitment you will likely have for many decades of your life, makes sense in a bunch of ways.


'It really pays to take out life insurance while you are comparatively young and healthy,' says Stephen van Niekerk, Head of Retail Life Insurance at Momentum. 'Insurance premiums are based on your age, so insurance is typically cheaper if you take it out earlier,' he explains.


On top of that, you have to provide the insurer with information about your medical history and any chronic conditions. As many lifestyle diseases and health conditions tend to worsen with age, you would therefore have to pay a higher monthly premium or place restrictions on your policy in terms of what you are covered for. In the worst case scenario, the insurance company could even decline your application.


If you sign up while you are young, your premiums will not only be much cheaper, but you will not have to take additional medical underwriting to increase the cover amount. In other words, after a certain period, your life cover amount can go from R100,000 to R125,000 without you needing a medical checkup.


Your earning potential is your most valuable asset


If you are the breadwinner in your family, those you love are financially dependent on you. Therefore, Van Niekerk says, your earning potential now and in the future is your most valuable asset.


"If you have dependants, ensuring that your income will be replaced – and your debt will be covered (including a home or business loan) – in the event of your death or disability, should be a key priority. We've all heard the stories of dependants being left high and dry without a monthly income and with debt to pay off. Don't allow your family to become one of these statistics – it is easy to put the appropriate life insurance cover in place right away."


If you are insured with some providers and also join their wellness programmes, you stand to score through discounted premiums, paybacks and other comprehensive benefits, when you manage your health well by logging a range of health-management behaviours – such as exercising regularly, eating healthily and de-stressing with mindfulness meditation, as just a few examples.


Education is expensive. Don't forget to protect it in your life insurance.


You should expect to have to spend between R1.4 million and R3.4 million in school fees in total per child, according to a 2019 Old Mutual report on school fees in South Africa. It goes without saying that this could be the single biggest expense in your children's lives as they grow up. You shouldn't have to worry about your children's education and future should something happen that means you no longer earn a salary.


Also ask your financial advisor about an education protection add-on for your children. The cover this provides will grow in line with the rising cost of education, whether primary, secondary or tertiary.


Add critical illness cover to your benefit to guard against severe illness or disability


While it may seem unnecessary now, adding a critical illness benefit to your cover now can pay huge dividends to you in the future. That payout can make all the difference should illness mean you're no longer able to work. Critical illness benefits provide cover for a wide range of defined illnesses and typically pay out much-needed lump sum, Van Niekerk says.


There are a range of serious illnesses that could leave you unable to work, such as heart attack, stroke or cancer. Even if it's for a limited period only, each of these come with huge expenses. This is when you will be glad you took out critical illness cover, as it will take away the added financial stress and pay you a monthly income if you are unable to work and earn a salary.


"Even with a comprehensive medical aid in place, there may be costs that won't be covered. Perhaps you want to pursue an experimental cancer treatment or hire an au pair or housekeeper to help out while you are recovering," he says.


When you consider that one in four of us will suffer from cancer by the age of 75 (a statistic that rises to one in two by the age of 85), the value of having critical illness cover as part of your life insurance cannot be underestimated.


Read more: How To Pick The Right Insurance Cover


Why reading and understanding the fine print is important


Are you clear on the basics of the cover that you intend taking out? It's important to note aspects such as compulsory premium increases that form part of the contract but do not lead to a corresponding cover increase.


"Compare products with and without such compulsory annual increases – the former will be cheaper initially, but could become unaffordable at a later stage. Then look at the period for which the insurer guarantees not to change the contractually agreed premium (otherwise referred to as the premium guarantee term), and all contractual exclusions. Go into the fine print with your financial advisor," Van Niekerk advises, "especially as regards the definitions of the cover provided when it comes to vital add-ons such as disability and critical illness cover."


All that then remains, is to sleep easy, knowing you and your loved ones are covered for any eventuality.


Hippo's life insurance comparison tool is a great way to review your life insurance policy options in one, convenient location.


This article is for informational purposes only and should not be construed as financial, legal or medical advice.

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