Taking out insurance is about more than being prepared for the unexpected or signing up because it is the ‘right thing to do’. Insurance should be carefully adapted and tailor-made to suit every different stage of your life, whether you are a young executive starting out, or a pensioner wanting to enjoy life.

We know that buying life insurance doesn’t make sense for everyone.  Although life insurance is a basic human need, not want, most people treat it with dissent, as an irritating afterthought, a grudge purchase. However, insurance is the one thing you don’t need, until you need it.

If you’re currently employed in South Africa, and have life insurance, there’s a good chance you’re among the underinsured.

Insurance is the one thing you don’t need, until you need it.

It is, therefore, important to find the best time to sign up for insurance and to know what aspects to consider at every age. The benefits of signing up for insurance far outweighs the alternative.

The thing is, while R1 million may sound like an impressive sum of money when you’re considering taking out life insurance, the question you should probably be asking is whether it will be enough to take care of your family’s needs over 20 to 30 years (it won’t). If there are people who depend on you and your income (especially if you are the primary provider), or have significant debts that outweigh your assets, you need life insurance.

Life insurance – put simply – concerns liquidity. It is about providing cash for the unavoidable expenses associated with wrapping up an estate and replacing the net income a family stands to lose over the longer term.

Make sure you understand what the advantages and pitfalls of insurance are, at every stage of your life, and ensure you are covered, whatever your age.

A basic guide of insurance considerations at every stage of your life :

Your 20s –

You are starting your first job, buying your first car, and probably getting your first furniture and appliances. Now is a great time to make sound financial decisions. Since it is the first time you might be taking out insurance, remember, cheaper is not always better. It is also important to be completely upfont about your situation.

Don’t lie about little things like where you park your car at night – in the event that your car gets stolen, these things can cause insurance not to pay out. In South Africa car insurance premiums for under 25s are quite steep but after the age of 25, most companies decrease your premiums substantially.

Life insurance works the opposite way. The younger you are, the less you pay and the earlier you attain it, the better. You might think it unlikely that your health will be failing at age 25, but still your life insurance rate increases the older you get.

Get it while you’re young, and you’ll receive a low rate, which could possibly be locked in, ensuring that you pay a reduced premium rate throughout your life.

Your 30s – 

You are probably settling down, perhaps getting married, starting a family and quite possibly buying your first house. Make sure to protect your new property and everything inside with home insurance.

Remember to be honest about the contents to ensure you are adequately covered. Don’t be tempted to save a little on monthly premiums and put yourself at risk in the long run. Check that you have installed the very best security in your home – it will reduce your monthly premium significantly.

Your life insurance should be in place to ensure your family is taken care of should anything happen to you. Since you’re merging your assets, consider putting your cars under one auto insurance policy to optimise savings. It is also a good time to start thinking about an education policy for your children.

Insurance cover is not static. You have to look at your own situation.

Your 40s –

You have been working hard, and probably acquired some wealth. Update your household content insurance and make sure that your insurance covers that new anniversary ring or the latest set of golf clubs.

An annual update is a good idea. You could even have a teenager who is starting to drive, so check that your insurance covers you when you are not the driver of your car.

Your 50s –

You might be buying a car for your child at university. Get proper insurance and don’t put yourself down as the primary driver. “Since your kids are adults, it may also be a good time to consider re- evaluating your life insurance coverage level. You might qualify for discounted insurance premiums,” says Joe Szemerei, Executive Director of Indwe Risk Services.

Your 60s –

With more free time, you can focus on you. Whether your dream is to sail around the world, travel the country, or spend more time at home, protect your assets with vehicle and homeowners insurance.

If you have invested in a second property or a holiday flat, check that you are insured, even when it’s not occupied.  If you rent your property to a tenant, check that they are aware that they need their own home contents insurance.

Many people feel apprehensive about researching car and life insurance premiums and packages – intimidated by the fine print, legal jargon and the maths. When calculating your life cover requirements, you’ll need to take a few things into account: your assets, liabilities, estate costs, number of dependents and how much you want each dependent to receive – you can do this with the help of a financial advisor.
Remember that communicating directly with an insurance advisor and getting the straightforward English answers is easier than ever.

life insurance is a basic human need, not want,

Conclusion

Insurance cover is not static. You have to look at your own situation. Your changing personal circumstances, as well as external factors will impact the sufficiency of your cover.

Revisit your life insurance needs analysis at least every two years, and select an insurance policy that will afford you the flexibility to amend your cover as and when you need to. As with investing, educating yourself is essential to making the right choice.

Salvo Capital offers you a range of products, tailor-made for every stage of your life. Speak to an advisor today.