The importance of life insurance for young South Africans
Discover why young South Africans in their 20s and 30s should prioritise life insurance and income protection. Learn how delaying these decisions can impact your financial future.
Image: File photo.
When it comes to protecting your income, if you become disabled or pass away, many young South Africans in their 20s and 30s think it's something to worry about 'later', after you've bought a home, climbed the career ladder, or started a family. But this mindset can end up costing more than you realise.
Have you ever thought about how many pay cheques stand between you and your retirement? The younger you are, the more income you still have to earn, and that's your greatest financial asset: Your ability to earn a salary is what makes everything else in your life possible, from rent, groceries, and savings, to future investments. That's why protecting it early with income protection cover makes good financial sense. And yet, many young professionals fall into the trap of putting it off. Why? Because of a little thing called present bias.
Present Bias: the invisible barrier to protecting your most valuable asset
Present bias explains why it's easy to ignore long-term planning like life insurance or income protection when you're young and healthy. The idea of a life event that could stop your income, like a serious illness or even death, feels remote. Instead, we focus on what's right in front of us: student loans, social life, helping out at home, or upgrading our tech.
But ignoring the risk doesn't make it go away. According to a BusinessTech poll, more than one in three (35%) middle-class South Africans aren't putting anything aside for their financial future. This means people are unprepared for any unexpected loss of income that could derail their financial progress overnight.
As highlighted by BrightRock, most of us insure our homes, cars, businesses, and possessions, but neglect to protect our income, despite it being the thing that pays for all those things. But if something happens to you that interrupts that income stream, your entire financial ecosystem could be under threat.
How many paycheques will it take to secure your financial future?
Think about it: over your working life, you will earn hundreds of pay cheques. They're the building blocks of your lifestyle and future plans. But what if something happened to you tomorrow that stopped those pay cheques from coming in, like an illness or disability?
Protecting your income is not just for people in their 40s with mortgages. It's something every working young adult should consider. Taking out income protection early means you're covered when you've got the most pay cheques left to earn, and you'll likely lock in lower premiums while you're still young and healthy. Over time, as your income grows, your cover can grow with you, ensuring that your lifestyle remains secure, even if your ability to earn is compromised by an illness or injury.
Why delaying life cover costs more than you think
In the same way, compounding works for saving money, and early planning works for life insurance and income protection. Starting late means paying more for less, as your risk profile will have changed, and cover is more expensive when your risk of claiming is higher.
For example: A 25-year-old non-smoker might pay a small monthly premium for a robust life insurance policy that protects their income. If you wait until 40 to get one, you could be less fit and healthy and even have a pre-existing condition like high blood pressure or raised cholesterol, which could make it harder or more expensive to get the same protection.
How to break the present bias cycle
· Start small, scale up. You don't need to get everything sorted on day one! Even a basic life policy or income protection benefit gives you a foundation to build on. If you don't have financial dependants, start with disability cover and then add life cover later, when your death would impact people who rely on your income. Educate yourself . The more you understand about how life insurance works and why it matters, the easier it is to commit. Check reputable sources and consult trusted independent financial experts to learn more about life insurance.
Speak to an independent financial adviser
. Get tailored advice that helps you align your protection plan with your life goals – and remember
to regularly meet with your financial adviser as your life changes
.
Your future self is counting on you
Life insurance may not feel urgent when you're young, healthy, and just getting started but every year you delay is a missed opportunity. For young South Africans navigating debt and rising costs, it's easy to focus only on today. But protecting your income now means having financial security in the future.
* Hanlon is an executive director at brightRock.
PERSONAL FINANCE
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Citizen
2 hours ago
- The Citizen
Political events happening in June expected to affect South African SMEs
'The fuel levy increases will compound existing cost pressures for SMEs, particularly those in logistics, manufacturing, and retail sectors that rely heavily on transportation.' June will provide some relief for Small and medium enterprises (SMEs) following the South African Reserve Bank's (SARB) Monetary Policy Committee's (MPC) decision to cut interest rates by 25 basis points. Another relief is that inflation is largely stable, and the exchange rate is trending favourably, giving the MPC some room for monetary easing. The economy needs every bit of help it can get, and this cut will no doubt be reflected in business confidence. Miguel da Silva, group executive for business banking at TymeBank noted how upcoming events will impact South Africa's position in a rapidly evolving global landscape and the effect of this reconfiguration on SMEs. ALSO READ: Reserve Bank cuts repo rate thanks to lower inflation, stronger rand Budget treads tricky course without cutting expenditure 'The national budget outlined a programme of continued expenditure propped up by less contentious funding mechanisms than previously tabled,' said Da Silva. After much debate, the Value Added Tax (VAT) rate will remain at 15%, providing certainty for SME pricing and cash flow planning following the proposed increase's withdrawal. To make up the shortfall, the general fuel levy has increased by 16 cents per litre for petrol and by 15 cents per litre for diesel. 'The fuel levy increases will compound existing cost pressures for SMEs, particularly those in logistics, manufacturing, and retail sectors that rely heavily on transportation.' With many small businesses already operating on razor-thin margins, this 16-cent increase represents an additional burden that will likely be passed on to consumers, potentially dampening demand in an already constrained market. ALSO READ: GDP grew marginally in first quarter – agriculture helped keep economy afloat First quarter GDP figures 'The Minister also revised his predictions for our economic growth to 1.4% in 2025, down from 1.9%. With the official unemployment rate now at 32.9%, the disconnect between our economic ambitions and the harsh reality that only 16.8 million South Africans are in active employment highlights the urgent need for policy innovation,' he added. Da Silva said what seems clear is that under these constrained market conditions, there is no way for established businesses to incorporate the millions of South Africans seeking employment. There is far greater potential for entrepreneurs to create new jobs, and a focus on small business support and development must be prioritised. 'SME funding will remain an important area of discussion and entrepreneurs; funders and public-sector representatives will meet to discuss the state of small business funding in South Africa at the SME SA Funding Summit 2025 on 12 June – but even more important is the creation of an environment which is conducive to entrepreneurship: less red tape and dependable infrastructure.' ALSO READ: Tariffs and Agoa: How Parks Tau summarised US-SA trade talks Agoa forum in DRC The relationship between SA and the US remains fraught, but at least there is dialogue. 'Apart from the Presidential meeting in the Oval Office, trade, industry and competition minister Parks Tau and agriculture minister John Steenhuisen have submitted a new trade framework to US trade representative Jamieson Greer. 'There are key areas where US investment might help us unlock value at home, and which might appeal to the deal-centric nature of the US administration. Developing a domestic source of natural gas would bolster SA's regional competitiveness and energy security, and we remain a key source of scarce minerals,' he added. The annual conference on the African Growth and Opportunity Act (Agoa) between trade ministers of Agoa-eligible countries and the US is scheduled to take place in the Democratic Republic of the Congo (DRC) in June. This will be an important indicator of what the US will do when Agoa expires in September 2025, though it seems unlikely at this stage that SA's Agoa benefits will be extended. While the overall impact of losing Agoa would not be immense for SA, some sectors – particularly the automotive and agricultural sectors – would be significantly affected. Both sectors have extensive value chains, and SME suppliers are rapidly adjusting their operations. 'The potential loss of Agoa benefits creates particular uncertainty for SME suppliers in the automotive value chain, many of whom have built their business models around preferential access to US markets. 'These companies now face the complex challenge of either finding alternative markets or restructuring their operations to remain competitive under standard trade terms.' ALSO READ: Analysts say Trump's bid to weaken Brics will fail as US influence declines Brics summit in Brazil Da Silva added that the Brics Summit, scheduled to take place in Brazil in early July, will again put SA in the US crosshairs, as provocative issues (such as an alternative to the dollar as the world's reserve currency) will be raised and debated by Brics countries. 'The timing could not be more delicate. For SMEs, particularly those in export-oriented sectors, this diplomatic tightrope walk translates into very real business planning challenges. 'Where do allegiances lie in a rapidly shifting global order? This geopolitical balancing act requires SMEs to develop strategies that can withstand diplomatic volatility while capitalising on emerging opportunities within both Western and Brics markets.' NOW READ: Political uncertainties that will impact SMEs in the coming months
IOL News
7 hours ago
- IOL News
Stella Must Go: Youth unemployment soars under her leadership
Minister Stella Ndabeni-Abrahams has presided over a department that has delivered little to nothing for SMMEs or the youth who rely on entrepreneurship for opportunity and survival. There has been a steady decline and collapse of support for Small, Medium, and Micro Enterprises (SMMEs) under the leadership of Minister Stella Ndabeni-Abrahams since her appointment 1400 days ago. Her tenure has delivered frustration for millions of young South Africans, be they job seekers or job creators. The recent appointment process for the Small Enterprise Ombud, which will be debated in Parliament today, is one more example of political patronage being placed ahead of championing SMMEs. Instead of appointing a credible, independent voice to advocate for struggling entrepreneurs, the process has been marred by backroom deals and insider politics. The very office that is meant to protect SMMEs from government red tape and corruption is being used as a reward mechanism for loyal cadres. Minister Ndabeni-Abrahams has presided over a department that has delivered little to nothing for SMMEs or the youth who rely on entrepreneurship for opportunity and survival. Despite numerous glossy presentations and photo ops, the facts speak for themselves: South Africa now has the highest youth unemployment rate in the world, with 4.7 million young people aged 15–34 not in employment, education, or training (NEET). In Q1 of 2025, the economy grew by a dismal 0.1%, confirming that the government's economic policy is directionless and anti-growth. Over 320,000 graduates remain unemployed, proving that education alone is not enough in a broken economy with no job pipeline and no enabling environment for new businesses. Young entrepreneurs trying to start or grow businesses face insurmountable obstacles: late payments from the government, lack of access to capital, bureaucratic red tape, and no safety net when disputes arise. Instead of reforming the system to support these youth-led enterprises, the department is busy recycling political appointees and rehashing failed strategies. It is time for Minister Ndabeni-Abrahams to step aside. South Africa needs a youth-focused, jobs-focused leader at the helm. Someone who understands the urgency of the unemployment crisis and who will fight for real reforms to unlock the full potential of the SMME sector. BOSA calls for: The immediate suspension of the current Ombud appointment process, pending a full review to ensure transparency and credibility. The resignation or dismissal of Minister Ndabeni-Abrahams, whose track record has become a barrier to growth, not a driver of it. The establishment of an independent SMME Red Tape Commission, led by private sector and youth representatives, to identify and remove the barriers preventing small business success. South Africa's young people are not lazy. They are not without ideas. They are without opportunity. If the government cannot get out of the way, it must be pushed out of the way. It is time for Stella to go. Roger Solomons - BOSA Spokesperson
The South African
8 hours ago
- The South African
DSD briefs parliament on basic income support policy
The Department of Social Development aims to provide basic income support for citizens between the ages of 18-59. During a briefing with the Portfolio Committee on Social Development, DSD updated parliament on the progress of the development of the Basic Income Support Policy. 'Work on the policy has been ongoing, with the first draft of the policy having been presented to the Social Protection, Community and Human Development Cluster Cabinet Committee on 26 November 2024', said DSD spokesperson, Bathembu Futshane. The committee raised that more consultations were needed in order to discus the policy. It was further suggested that meetings should be held with internal stakeholders. The meeting would focus on the affordability of the policy and linkages of its proposed beneficiaries with economic opportunities. An interdepartmental workshop was held in order to communicate the directive of collaboration. According to Futshane, the workshop affirmed the need to link the policy's beneficiaries to other employment and sustainable livelihood opportunities. 'A follow up workshop will be held in June 2025. Followed by bilateral engagements with the Presidency, the Department of Labour and National Treasury', said Futshane. He said once the consultations are concluded, DSD will approach the SPCHD Cabinet Committee in the second Quarter of the 2025/26 financial year. They will request cabinet to consider the revised policy. Once the policy is approved, it will be published for public comments. Futshane said that in order to ensure stability during the consultation period, the department will consult National Treasury for the R370 Social Relief of Distress grant be extended. The grant will remain in place until the legislative process is complete. Beneficiaries will be protected from extreme poverty and vulnerability while they wait for the policy to come into effect. 'The Department, has for the interim, been granted an extension by the National Treasury to continue with this provision for the 2025/26 financial year', concluded Futshane. DO YOU THINK SOCIAL GRANTS ARE HELPING SOUTH AFRICANS OR ENCOURAGING A CULTURE OF LAZINESS? Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
