YOUNG ADULTS AND INSURANCE – NOT ONLY FOR OLD PEOPLE
IS INSURANCE ONLY FOR ‘OLD’ PEOPLE?
Young adults and insurance – “It never really crossed my mind,” 23-year-old Julie Kronick said about life insurance when she got her first job out of college at a non-profit in New York. They don’t offer insurance, it didn’t come up and I didn’t particularly care,” Kronick said.
This is an extract from an article on www.cnbc.com. This scenario is valid around the world, and South African millennials mostly share the same sentiment.
YOUNG ADULTS AND INSURANCE – LIVING IN THE ‘NOW’
Instant gratification and living for ‘now’ seems to be the mantra of a great deal of young people today. Young adults and insurance just do not seem to go together. Who can blame them when we live in a connected world where everyone can provide an opinion via social media. See something online, want it, buy it. Providing for old age and buying insurance seem to take a back seat. But should it?
WHAT TYPES OF INSURANCE ARE OUT THERE?
Let us start of by summarising the various types of insurance available in South Africa today. Note, this is not an exhaustive list, there may be more categories of insurance available.
There are short-term and long-term insurance.
Short-term Insurance is when an item gets covered for a short period since your needs will change over time. Vehicle, property, household, home owners, medical, personal liability, travel and business insurance come to mind.
Long-term insurance is directly linked to an insured person’s life or wellbeing. This type of insurance is usually paid over a long period of time and includes life, disability and income protection insurance.
Short-term insurance is sometimes ‘forced’ upon you – when you finance any asset, the bank will require that asset to be insured. In other scenarios, short-term insurance remains optional, although certain employers may offer health or medical insurance as a perk.
Long-term insurance is normally the category that some younger people tend to avert. ‘I do not need life or disability insurance, I am young and fit and plan to live forever…’
WHY DO YOUNG ADULTS NEED INSURANCE?
The Need for ‘Optional’ Short Term Insurance
While a nice car and the latest smartphone may be a bigger priority for some, certain categories of insurance can no longer be postponed.
Think you do not need personal liability insurance? Think again, once a faceless social media user takes you to court for defamation. Social media has the potential to do serious harm and damage to others. Any comment, tweet, blog or even a Like that are posted or re-posted that falsely injures the name and reputation of another person, is considered defamatory. Many people who communicate on these social network platforms do not realise how potentially dangerous it can be. If any comment that is considered defamatory is made in any public domain, including on any blog or a forum, you could find yourself being sued for defamation. Personal liability insurance is thus no longer a luxury.
Many young people are starting their own businesses or are entering the formal workplace for the first time. Being young, dynamic and fearless, the last thing on their minds are health and business insurance. Things can change in an instant – do not be caught with your pants down.
Paid off your car? No more need for vehicle insurance? Consider Third Party insurance – at least you will not be ruined financially should you cause damage to an expensive Bentley.
And Long-term Insurance?
Many young adults may think they do not need long-term insurance, but the fact is it becomes more expensive the longer you wait. The younger you are when taking out life insurance, the less you will pay. Youth and health also tend to go together, so you may enjoy less or no exclusions on a life policy should you invest in one during your early twenties.
TO INSURE OR NOT TO INSURE?
Insurance may be seen as a ‘grudge purchase’ by many, especially young adults, but it remains a necessity for the times we live in. Investing in the right category of insurance, earlier, rather than later in life, makes sense.