If you are employed and have people who rely on you financially having life cover is essential regardless of your age. Lee Bromfield, CEO of FNB Life says the most basic need for life insurance is to ensure that your loved ones are not impacted financially in the unfortunate event that you pass away.
“For families that are finding it hard to make ends meet, not having life cover can both be a missed opportunity and a costly mistake as a loss of income could have undesired consequences,” says Bromfield.
Young professionals often assume that life insurance is only necessary when having your first child or getting married, overlooking the fact that there may be other family members or dependants who rely on them directly or indirectly.
“Even if you don’t have people that depend on you yet, there could be those who are already looking up to you to assist financially. For example, siblings that you could assist with school requirements and funding for university,” says Bromfield.
He says a life insurance policy could further help realise aspirations that you would not be able to fulfil in the unfortunate event of death, such as building a family home or property portfolio in order to create wealth and leave a legacy.
“With a life policy you can ensure that your dreams still come true when you are no longer around to realise them personally,” he adds.
Your policy can also come in handy to reduce tax costs associated with winding up a deceased estate and ensure that your beneficiaries get the maximum of their inheritance.
Depending on your income and risk level, when getting a home loan, banks may also require you to take out a life policy which would be ceded against the loan. This ensures that your dependants don’t have to worry about lenders coming after the asset should something happen to you.
Moreover, life insurance is more affordable at a young age compared to when you are older. Therefore, getting life cover as early as possible will not only safeguard your dependants, but will help ensure that you get a good premium rate.
“If you neglect taking out life cover as soon as you start working you could be compromising the financial wellbeing of your loved ones,” concludes Bromfield.