The season of young adulthood can be a joyous and tricky one, as so many changes are happening at the same time – you earn a salary for the first time, you need to learn how to adapt to the work environment and start to pave your own way.
“Every life stage requires you to be ready for the unexpected – insurance is the best thing to have in place when starting to earn a salary, as it is your safeguard when life takes an unexpected turn” says Piet Wolmarans Managing Director at iMas Insurance Brokers. If you suffer a loss due to an accident, theft, or damage, and you do not have insurance, then you need to pay for it out of your own pocket. When you just started working, you most likely will not have a lot of disposable income and savings available yet.
“It is much better to pay a small premium each month and know that you are covered” says Lize Badenhorst GM: Short-Term Insurance at iMas Insurance Brokers. “It is advisable to partner with an insurance broker. You could save on your premium, as your broker will source quotes for you to choose from, and could negotiate the best deal for you” continues Badenhorst. When you just start ‘adulting’ it can be overwhelming to know which insurer to partner with, so a Broker could advise what the best insurance product is to suit your needs and pocket and when you claim, they will act on your behalf.
As important as insurance is, it can be quite expensive. So how do you decide which policies to take out when you earn an entry level salary? “There are a lot of insurance policies available to cover you against all types of risks, however when you just start working, you need to be smart about where you spend your money. Not having insurance at all is not a good idea. So, as a caring insurance partner, we advise young adults to consider the following insurance options.” says Badenhorst:
• Car insurance: There are two types of cover: comprehensive insurance which covers you in any event (i.e. theft, fire, and covers your- and the other person’s damage – in case of an accident) and third-party cover, which is more affordable, however it only covers the other person’s damage if you are in an accident. You must also take into consideration the type of vehicle you drive – if it is a smaller, new baseline car, then the cover could be more affordable versus insuring a more expensive vehicle.
• Home and personal possessions cover: When you just start working, you might still be living with your parents, house share, or have a small apartment, so you might not need home contents insurance, unless you have expensive items like new appliances and new furniture. Whenever you stand to lose financially, in case of a loss, you should rather opt for insuring those items, as one can never predict a loss. It is advisable to take out personal possession insurance (also) for items such as a laptop and a mobile phone. Items you carry on, or with your person, are always at risk of being lost or stolen.
• Retirement, Savings, and Investments: Saving for a particular goal and retirement gets harder the older you get, as your expenses will most likely increase. So, it is easier to start saving a little each month as soon as you start working. Remember that there are various options available – so make sure you take up a product on which you earn the best interest.
• Funeral cover: When you are young and healthy, you do not want to think about passing away, however, it is inevitable, so the sooner you get this cover in place the better. Also, look for a policy that will not just cover yourself, but also your immediate family members, as funerals can be expensive, and it could be more affordable to take out a cover for you and your immediate family versus taking out a single policy.