Why insurance is essential for young South Africans

News24

28-07-2025

Almost half of working South Africans don't have cash saved for unexpected loss of income.
Early insurance like disability and income protection can cost less while you're still young.
You need to build a profile to show a good track record of being insurable.
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If you think insurance is only something for your 40s and beyond, your future self might want a word.
Life is full of surprises. When it comes to protecting your income, whether you become disabled or pass away, many young South African in their 20s and 30s think it's something to worry about later, after climbing the career ladder, buying a home or starting a family.
But this mindset can cost you more than you think.
Research shows that 48 percent of South Africans in the workforce don't have enough cash in their savings to cover at least three months of living expenses. No savings mean that many are unprepared for any unexpected loss of income.
Leruo Malumo, the head of product at Santam, says, 'Young people need insurance because it provides a way to bounce back from the financial shock of losing a key asset. This could be a phone, laptop, handbag or if you're more fortunate, a car.
'The better your insurance track record, the stronger your case for a lower premium, so it's never too soon to begin your insurance journey.'
The common mistake of present bias
The younger you are, the more income you still have to earn, which is why protecting it makes good financial sense. But many young professionals fall into the trap of putting off getting cover like life insurance.
Sean Hanlon, the executive director at financial institution Bright Rock, describes this as present bias.
'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,' Sean explains.
Delaying insurance and life costs more than one might think.
Sean gives the example of 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,'he adds.
What kind of insurance should be on your radar?
Just like with a credit profile, you need to build an insurance profile to show a good track record of being insurable.
Atang Matebesi, Santam's CEO of client solutions, explains that young people usually claim for car theft or damages and personal items like phones and laptops.
'When considering what to insure, it helps to think about the items that would be financially devastating if they were lost or stolen.
'For example, if you are renting and don't need home insurance, you may still want house contents insurance particularly for items like your TV, white appliances, etc. as they would be costly to replace.,' Atang advises.
Start small and know what to compare
Start small with a basic insurance policy and educate yourself through reputable services like Smart Money or by consulting a financial advisor.
Sean says, '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 dependents, start with disability cover and then add life cover later, when your death would impact people who rely on your income.'
But don't just go for the first quote you receive.
Atang explains that young people ' should compare the excess structures, types of cover provided, terms and conditions of the policy, value added services, claim overturn ratio and customer reviews. A reputable claim paying record is also very important since claim payouts are ultimately what clients want from their insurer'.