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Life Insurance essential in your 20’s

Life Insurance essential in your 20’s

Life insurance should be part of everyone’s financial blueprint as early as possible because it has various benefits even when they are around, and getting it as early as possible could help them save on premiums, Standard Bank’s Stanfin Managing Director Werner van der Merwe, said.

“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 and children, events that make financial planning and life insurance a necessity,” van der Merwe added.

Van der Merwe noted 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. What should be considered is the positive side of taking out a life policy when you get your first pay-cheque,” he explained.

He added that everyone no matter how young needs to buy life insurance for obvious reasons such as when they have clear insurable interests and want to be financially protected from a catastrophic accident.

“These interests could stem from large debt obligations from student loans or a mortgage that you do not want to be passed on to someone else,” van der Merwe added.

Furthermore, van der Merwe noted that the earlier a person takes out their policy, the less of a dent the payments will make in their disposable income.

According to him, not all policies are the same but because they are younger, a person may have fewer limitations on what cover you can apply for, especially if they are in good health and they have very few bad habits, like smoking.

Van der Merwe added that while a young person may not necessarily see the need right now, they may want to consider a policy that covers them if you become permanently disabled and cannot work.

“Some people believe that life insurance is too complex and the choices are too vast. However, there are companies that 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,” Van der Merwe concluded.

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The Economist accommodates two interns every year, one per semester. They are given less demanding, softer issues to hone their skills, often with a specific leaning to social issues. Today, many of our interns are respected journalists or career professionals at economic and financial institutions. - Ed.