Young twenty-somethings generally prioritise paying off their student loans, buying a car, moving into their own apartment and kick-starting a career. Life cover is not usually a consideration. However, there are numerous arguments to be made for buying life cover at a young age – the biggest advantage being the price of premiums.

Petrie Marx, Product Actuary from Sanlam Individual Life, says that millennials are the ‘later’ generation, “Generally, they’re buying homes, having children and getting married later and they often postpone buying insurance too. 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.”

So, what are the benefits of getting life cover when you’re young?

  1. Lower premiums: Age really is on your side in your 20s. Most young adults enjoy better health which will equate to lower monthly premiums with no exclusions. For example, a healthy, non-smoking female could expect to pay around R180 in monthly premiums for R1 million of life cover at 25. If the same individual took out the same level of cover at 45, she could pay around R390 if she maintained a healthy risk profile. By purchasing insurance at an earlier age, their insurance will stay intact as per the policy wording even when their state of health changes as they age.
  2. Young people need life cover too: As soon as they start a career, young people tend to think of physical assets first – buying a car or investing in property. However, the long-term income earning potential is a young person’s biggest asset and must be protected.
  3. Loved ones will not be liable for your debt: Thousands of young South Africans have some form of debt. For example, it is estimated that the collective student debt owed to SA universities is over R14 billion. Life cover protects the family from being liable to settle this debt in the event of their death.
  4. Things can go wrong for young people too: People under 30 usually claim due to unnatural causes. According to Stats SA, road users are at the highest risk in their 20s, and a bad accident can compromise one’s ability to earn an income.

    Additionally, in 2020 and 2021, more than 50% of all Covid-19 related Sanlam income protection pay-outs were to people younger than 39 years old, underlining the critical importance of income protection for young professionals. The long-term loss of income due to illness or injury is the single biggest financial risk young people face.

  5. Young adults are not exempt from severe illnesses:  In 2020, 7% of severe illness claims paid by Sanlam came from people under the age of 35. While medical aid may pay for the costs of medical treatment and hospitalisation, there are frequently shortfalls that can be financially crippling, especially when you are just finding your feet in the professional world.

Marx concludes, “Usually, marriage or the birth of a child is the biggest trigger for people to buy life cover. However, there’s a good argument to be made that buying life insurance when you’re young, healthy and have no dependents is just as worthwhile.”

Article credit