Insurance is often neglected during people’s twenties and inflated during their forties. So, which insurance products should you pursue at which age?
Herein lies the difference between finding yourself in a financial bind by being underinsured or being prepared should the unexpected take place.
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Justmoney explores the necessary cover you need in each age bracket in this easy-to-understand guide.
The thrifty twenties
This period in one’s life often signals tertiary studies, starting an internship, or trying to get a footing on the corporate ladder. Money is often the issue. Whether you’re struggling to make it or manage it, not much is left over for expenses such as insurance.
But while it may not be a priority, insurance experts believe it may be the best thing you can gift yourself during this period of your life.
There are often quite a few deciding factors when it comes to insurance premium price, with one of them being age. According to experts, the younger you are when you take out certain insurance plans, such as life insurance, the more you stand to benefit from lower premium prices.
Another consideration in investing at a young age is the advantage of wealth or cover accumulation. By the time you hit your twilight years you are comfortable in having built-up a healthy amount of cover. Something your 50-year-old self will thank you for.
This is also the period in which you may have purchased your first vehicle or started your first job.
Here is a breakdown of the cover you need to consider:
Life insurance
This is usually the one that twenty-somethings have the most trouble with because they’re young and healthy. But this is often based on a misunderstanding or being uneducated about the benefits of life insurance.
Like most things in life, nothing is guaranteed. But that doesn’t mean you need to leave your loved ones ill-prepared.
Life insurance has the benefit of allowing you to leave your loved one’s in a better financial place.
Life insurance can also take care of those hefty student loans you may have or any other debt for that matter. For example, if your parents co-signed on your loans, they may be expected to pay your debt in the event of your death. This may not be financially possible. But through life insurance you can ensure that they aren’t left with the financial burden of carrying your debt.
Vehicle insurance
If you haven’t yet bought a house, your vehicle may at this stage be your biggest and most expensive purchase. Between a busy work and social life, it may also be the asset you rely on most. And while you may be confident in your driving ability, anything can happen.
For this reason, insuring your vehicle is a must. Comprehensive car insurance allows for you to be covered in case of any damage – whether fire, accident related, or theft. It also offers cover if you damage another vehicle and a claim is made against you.
Insurance premiums are primarily based on the vehicle, how long you’ve had your driver’s license, and your claims history. Typically, the more expensive your monthly premiums are, the less you’ll have to fork out on an excess fee should anything happen, and vice versa.
What’s interesting to note, is that at the age of 25 you automatically qualify for a review of your insurance premiums in the aim of lowering them as you are now considered a “lower risk”. The decrease in premiums can range from between 12 – 20%, case dependent.
However, this decrease will not occur automatically, so contact your insurer to find out more, should you fall in this bracket.
Medical aid and health insurance
Again, your twenties being your care-free years, means that falling ill may not be at the front of your mind. But given the unhealthy lifestyles that young adults sometimes lead, the reality of non-communicable or lifestyle diseases, such as diabetes, cancers, and cholesterol, is rising.
Accidents can also occur in a heartbeat, leaving you with a trail of medical bills and potentially being unable to work. Medical insurance gives you the peace of mind in knowing that should anything happen to your health, you are financially covered.
If you are healthy, other alternatives could be a hospital plan, where you simply make provision for any in-hospital expenses, which are usually expensive.
Disability cover is also a handy add-on benefit. Should you be physically unable to work, this ensures that you are covered. This is in the form of a lump-sum pay-out that assists with the loss of income.
Taking out medical cover at this age could also signal lower premiums as you are seen as low-risk.
Travel insurance
Being young and unattached can also count in your company’s favour, as they may be more inclined to send you on business trips. These can pop up at any time and may signal you having to visit developing countries. Having travel insurance in these instances is key.
This is because it can protect you and your belongings. Another benefit of having travel insurance is the provision it makes for ransom money, should you be adducted in a foreign country. Often kidnappers request exorbitant amounts of money, that you or your family may not have.
Even if the travel is simply for leisure, you want to ensure that you are free to enjoy the holiday knowing you are covered.
The thriving thirties
If you played your cards well in your twenties, your thirties may be the dawn of success. Perhaps you lay the groundwork for your career and you’re starting to reap the benefits, or maybe you got married and you’re about to start a family. For others, buying a house or moving into a new one could also be on the agenda.
Depending on your priorities, your thirties is known as the busiest decade of a person’s life.
With more knowledge than your twenties, you have now come to understand the concept of managing your money efficiently and, in doing so, ensuring that you are properly insured. But with all the run-around in your thirties, you may neglect reviewing your cover.
However, there is no better time to start than now. So, what cover is vital in your thirties?
Here is a breakdown:
Medical aid/ Health insurance
Your health comes first. And it may only be in your thirties that you start realising this because you may now have dependents and more responsibility that suffers when you take ill.
Having medical insurance financially allows you to take care of your health and the health of your dependents such as your spouse and children without having to break the bank.
Your thirties is also the time when you should get certain health checks done. For women it could be frequent mammograms or pap-smears, or prostrate checks for men, but having the necessary cover means this doesn’t have to come out of your pocket.
Another consideration is growing your family. Family planning, the pregnancy journey, giving birth, and after-natal care is expensive. Ensuring you have a good medical plan in place allows you to enjoy the journey without the added financial stress.
Disability cover is also vital at this age as it ensures that if you are unable to work, your family, who may be financially dependent on you, as well as your medical bills and expenses, are covered.
Life insurance
The need for this cover becomes more important when you get married and have children. What this simply means is that, from paying off debts and footing your children’s education, to covering funeral costs, you are ensuring your loved ones are financially secure after your death.
When making budget calls, insurance is often the first to go. However, according to insurance experts, this needs to be one of your priority expenses.
Having a family, a demanding job, and running a household is not easy, so why not at least give yourself peace of mind when it comes to your family’s financial future.
Here, it is vital that you ensure your cover grows with you and your expenses.
Car and home insurance
Arguably your most valuable assets, your car and your home need protection. And having a lot to pay for, you’ll keep an eye out for savings. Bundling your insurance into one can be that saving. If you’re insured under one provider, your insurer will suggest having your car and home insurance under one premium.
Being considered a lower risk driver at this age, you may enjoy lower premiums than in your twenties. But you may have a new, fancier, or bigger car that may also affect premium prices.
Buying a house is another factor. Depending on where you’ve bought it, and whether it’s secure or boasts elements like a swimming pool or thatched roof, your premiums may vary.
The smart thing would be to chat to a trusted financial advisor, because as much as you’d want to pay less, it is as important to ensure that you have enough cover.
Legal insurance
While this may seem an like an unnecessary-insurance, your thirties may find you needing legal insurance. Whether you’re going through a divorce, struggling with a dispute at work, or looking to buy a house, legal advice and cover is beneficial.
What’s more, having legal insurance gives you anytime-access to a team of legal professionals when you need it most.
The frugal forties
The saying goes “life begins at forty” and we’d like to affirm that to be true. You’ve ran the rat race and you’ve conquered. You’re more secure in who you are, what you’re after, and where you’re going.
Your mind-set is also more focussed on planning for the future and for your family’s future. With this you’ve also made enough financial mistakes to know where it is you’ve been going wrong.
In being secure, your insurance should reflect this too.
So, what are the insurance must-haves in your middle years?
Here is a breakdown:
Life insurance
Like in your thirties, having life insurance in your forties is just as vital. Life is stressful and as your children grow so do the expenses. If you pass on during this period, chances are you’re leaving behind a spouse or partner and a child or two. But having life insurance means providing for their financial wellbeing.
However, the downside of taking out life insurance in your forties is that it could cost you double what you would’ve paid had you taken it out in your twenties. This is because you do not have the benefit of having compounded cover over time, and you’re older and seen as a higher risk.
On the flip side, if you already have insurance, ensure that it is on par with your salary. As a rule of thumb, insurance experts state that the pay-out should be between six to ten times your annual take-home salary.
If you’re married, another consideration would be whether to take out a joint life insurance policy. Here the key is to remember that while this would prove cheaper, as it would only require one premium, it would also mean only one pay-out.
This is opposed to two independent life policies which would each serve their own respective pay-outs. This decision for many is dependent on their circumstances and whether their family would need the extra financial help.
Car and home insurance
By this age you’ve probably already taken out both car and home insurance and realised the importance of having it in place. Maybe you’ve run into an accident or two and experienced issues with your claims, or perhaps you feel that you should pay less.
Either way, shop around and ensure that you’re getting the best cover at the best price for your pocket.
Insurers need to be kept on their toes, and often people go year in and year out missing opportunities to negotiate with their insurer for a better deal. Ensure that you’re pro-active when it comes to your cover.
It is also important that you are not underinsured. This sometimes happens in your forties as you tend to accumulate quite a bit more inside your home. Make sure that your contents insurance reflects the correct value of the articles in your home.
Give yourself the exercise of having your assets valued annually and updating your insurer accordingly. Similarly, should you want to renovate your home, when it comes to buildings insurance, ensure that you are adequately covered.
On the car insurance side, you are now deemed “low risk” and “stable”. Ensure that your premium reflects that. Often providers tend to throw in a bunch of free add-ons and benefits at this age, so don’t forget to review your cover.
Medical aid and health insurance
Forty is where certain health niggles start showing themselves. Whether it be an achy knee or a more serious health condition, chances are you need medical attention.
This is also the decade where you start understanding the value of having a good health cover plan.
The key question to ask yourself about health insurance in your forties is, “Do I have enough cover?”
Yes, it may be too late for that question, but better now than in your fifties or sixties. If you find that the answer is “no”, then you need to make the change now.
Having a trusted financial advisor on board and a good relationship with your insurer is important.
Drilling down on key benefits like critical disease cover, disability cover and income protection are also of importance at this age. It ensures you and your family are covered should you fall ill and are no longer able to earn.
On the flip-side, you should also ensure that you’re not doubling up on cover in the name of being “secure.” Many people unknowingly are privately paying for benefits like critical disease cover while their employers cover them for the same.
Travel insurance
You may be interested in travelling, either on your own or as a family, and you will need to take out travel insurance. While you may already have the benefit coupled to a medical aid product or a credit card account, the key is in ensuring it is enough for you and your family. Depending on your children’s age, your insurer may cover them for free, which is a win.
Consider your health too. Factoring in any pre-existing conditions could mean a higher excess, but it’s a small price to pay should you fall ill abroad. If you’re not happy with the cover offered to you by a certain provider, shop around.
The fifties, sixties, and everything thereafter
Forget what you’ve been told, fifties today is not old. But it is the beginning of your golden years – the years you’ve worked hard for, and hopefully, saved for.
Safe to say quite a bit happens in the years after you turn fifty. You may be retiring, you may be downscaling and moving into a smaller house, or you may find that you’ve planned poorly and that you are simply not financially prepared.
But what does turning fifty and older do to your insurance cover?
Here is a breakdown:
Medical aid and health insurance
If you’re still working, which is likely up until the age of sixty, you’re paying for your and maybe your spouse’s medical insurance.
These are the years where chronic issues and conditions really act up. This makes having medical insurance at this age arguably the most important policy.
Challenging yourself to review your cover annually or every six-months – health dependent – is vital. This means combing through every benefit, service, and extra-fee that the policy holds, to ensure you are financially safe and covered.
If you’re not confident in doing this on your own, consult a trusted financial advisor, insurance expert, or your insurer itself to assist and explain to you any questions you may have.
Critical and dread disease cover may also come in handy in this period. To avoid finding yourself under-insured should the time come to claim, review your policy every six months to one year.
If you’re only taking out medical insurance at this age, be warned that it could get expensive. You are now seen as a higher-risk because of age and possibly other pre-existing conditions. Still, it remains the best thing to do for your health.
Often parents at this age are insured through their children’s medical aid. If this is the case check that the cover they have taken out is sufficient and inclusive.
Car and home insurance
At this age you may remove your children from your vehicle insurance and seeing your premium price decrease. Similarly, reviewing your cover holistically can also save you money.
Your car loses value annually and once your vehicle reaches a certain value threshold it will cost less to insure. Keep abreast of this and contact your insurer to find out if you qualify and where you can save.
There are also certain add-ons that are in place while your car is under financing. If you’ve paid your car off these additional expenses should be removed.
When it comes to your home insurance, a similar trend can be seen. According to insurance experts people over fifty tend to put in fewer home insurance claims, so their premiums tend to decrease. Over-fifties also tend to downscale to smaller homes set in more secure complex environments. This security further sees them paying less.
Also ensure that your valuables, such as your jewellery, appliances, and furniture, are adequately covered under contents insurance.
Life insurance
Your children may be completing their tertiary studies and starting their own adult lives, or they may still be fully financially dependent on you. Either way, giving yourself the peace of mind that they are financially taken care of is worth it.
If you don’t have any children, you may just want to ensure that your spouse, partner, or extended family members are taken care of when you pass.
It is important that your dependents are aware of the policy you have taken out and what to do should it come time to claim.
By this stage you’ve been religiously paying towards this policy, so ensure you know what you’ve been paying towards. Contact your insurer to make sure it is still adequate cover and that it’s growing the way you need it to.
You should refrain from just cancelling your policy instead consider having your children take over the payments. This could assist you financially by freeing up some cash but also it is in your children’s best interest as they will be receiving the pay-out once you pass on.
A good life insurance grows with you and your needs and allows you to tailor-make the cover to your situation.
Be aware that should you still be looking to take out cover at this age, with certain providers, you will be subjected to the underwriting process. This means having to answer health questionnaires and possibly even medical exams. If you’re in good shape this may seem fine. But if you’ve got any pre-existing conditions it could mean paying significantly more in premiums.
Funeral insurance
While some may argue that this is a must-have at the other stages and phases of your life, it undeniably becomes increasingly important in your twilight years.
Having funeral insurance, like life insurance, is committing to helping your family after you’ve passed. In this case, it’s intended to financially assist with the funeral and all associated expenses.
Often plans also offer additional benefits like an education fund, which is good to keep in mind. It is best to invest in a plan that will give your family the financial support they require.
You can also cover up to eight people on a typical funeral plan which means you can build-in coverage for your spouse, your children, and your parents too.
What to remember about insurance at any age?
- When taking out an insurance plan, check that it gives you the cover you, your family, and your assets require.
- Review your insurance annually. A lot can change in a year, so you’ll want to ensure that as you grow, so does your cover.
- Ensure that where there are dependents on any of your policies, they are aware, as far as possible, of the policy and what to do in claim stage.
To apply for any of the above mentioned products, visit Justmoney’s insurance page, and receive the cover you need today.