Millennials are more likely to take out expensive travel and cellphone insurance than life assurance, but the single biggest risk they face is their inability to earn an income if they are disabled in an accident or contract a severe illness such as cancer.
A Discovery Life study estimates that of the 145000 graduates entering the job market at the end of this year, about 3900 will die, suffer a disability or contract a severe or critical illness before the age of 35.
According to the study, entitled “Millennials at Risk of Underinsurance”, people born between 1981 and 1996 collectively have a shortfall of R15-trillion in life cover.
Ironically, the cost of life, disability and severe illness cover is much cheaper than travel, cellphone and other forms of short-term insurance, according to the study.
For the young and restless
And the earlier you take out cover, the cheaper it is over time. For example, if you took out life assurance when you were 25, by the time you turned 30 you would be paying a premium of R270 per R100000 of cover.
But if you took out the same amount of cover for the first time at the age of 30, you will pay R310 per R100000 of life cover, says Gareth Friedlander, the head of research and development at Discovery Life.