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Understanding Insurance


"I am too young to worry about insurance" - ever heard that one? June is Youth Month and we would like to share some information to challenge the myth that we have often heard young people say in an attempt to not think about life cover, funeral cover or even retirement.


Research shows that it's more affordable to start while you are still young because funeral and life cover premiums are cheaper when you are younger. And because you are assumed to be further away from retirement, premiums are lower because of the amount of time you have to save up. The assumption is that the younger you are, the healthier you are, therefore less risky. Insuring your life, your salary or your possessions is less about age, but more about protecting what you are working so hard to acquire and build.


Life Insurance

A life insurance policy guarantees the insurer pays a sum of money to the insured beneficiaries when the policyholder dies, in exchange for the premiums paid by the policyholder during their lifetime. Thinking about death is not something that we like to do, but it is an inevitable part of life. Young or old, death does come to us all; the only control we have is being able to prepare for when that moment comes. As a young person, you may have student loans or debt from your first apartment or your first car. Life insurance will ensure that these are paid off in the event of you unexpectedly passing away. Your elected beneficiary would be able to settle these debts, not leaving any remaining family members with a burden to settle your affairs.


Short Term Insurance

According to News24, short term insurance includes all types of insurance policies other than life insurance. These include insuring your car, property, household, health, personal liability, travel, business and movable items such as jewellery, mobile phones and other electronics. It's an agreement between a policyholder and insurer which exists for a limited amount of time or is flexible according to the individual's circumstances. For example, as a young person you may need to insure your car, your gadgets like your computer or smart phone. This would be protection against loss, damage or theft. You may also choose to protect your salary in case your job ends due to a retrenchment or illness.


Funeral Cover

Funeral Cover is a form of insurance that pays a specified amount of money in the event of a death, ensuring that the costs of a funeral will be covered so that family members do not have to struggle financially at this difficult time. Dealing with the loss of a loved one is hard and the financial commitment that comes from the funeral adds to the weight. As a young person you could take cover out for family members such as parents to ensure that you are able to contribute in your family's time of need or you could also take cover out for yourself to ensure that your family is able to send you off with dignity.

When it comes to insurance there is no one size fits all. It all depends on each person's situation. That is why it is important to speak to an accredited Financial Adviser to guide you through these choices. Click here to speak to a Liberty Adviser.


Sources

*Investopedia - Click here

News24 - Click here

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