Insurance Biz – Feature

Author: Melody Cloete, Training Specialist

Most South Africans only start thinking about life insurance when they start their working lives, but that could be a costly mistake.

According to Bidvest Life’s 2022 Claims Report, full-time tertiary education students were the second most common occupation to claim on Event Based Cover. Read that again: Students were the second most likely group to claim on their income protection policy for injuries and illnesses that affected their ability to pursue their studies, careers, or future to come.

Students are typically young, healthy, and in the prime of their lives. Should they still have life insurance cover in place to protect them against the effects of illness or disability? Simply – yes. Melody Cloete, Training Specialist at Bidvest Life unpacks four good reasons why:

Income protection and critical illness cover are, well, critical: All students should have a safety net in place, in case of an accident or illness that robs them of their potential to live the life they’re planning. That means having income protection (especially if they’re working their way through their studies), as well as cover for critical illness and disability. Adam^* was still a student when he lost the use of his arm in an unfortunate hit-and-run accident. For most students, that would have been a major blow to their prospective career and earning potential. Fortunately, Adam had Event-Based Cover in place, which means he’ll continue to receive a payout until the age of 65, giving him peace of mind that he will always be financially secure.

Protect their future earnings… Starting today: Even a temporary injury or illness could result in a child’s studies taking longer to complete and delaying their career. In the worst-case scenario, a more serious or permanent disability could affect their entire future earning ability, in which case they could remain financially dependent on their parents or siblings for the rest of their lives.

The younger they opt in; the more they get out: When you buy life insurance for a younger person, you’re typically going to have lower monthly premiums because their risk profile is that much lower. And, if their children do not have any pre-existing conditions – like hypertension or high cholesterol, which generally affect older people – parents of students should invest in life insurance now, before health issues arise and the policy may need to cater for exclusions.

There’s a lot more to life income cover than you think: A student, or someone starting out in their career, doesn’t necessarily need R2 million in life insurance for their beneficiaries right now. But parents whose children are studying should look closely at their child’s financial responsibilities that would need to be covered for in the event of their untimely death. For example, a lump sum payout might help the family to pay off their student loans. Similarly, if their children are contributing financially to the household, life income cover would ensure that the family receives a monthly payout to provide for these financial obligations on an ongoing basis.

From a parent’s point of view, when their child starts studying, they’re nearing financial independence. And while they’re not earning an income, if they were to get injured or ill, this would have a knock-on effect on their ability to complete their studies as planned. This would have an impact on how long they would take to become financially independent, which ultimately falls onto the parent to fund.

Encouraging your clients to protect their children’s futures with the right life insurance products, including income protection and critical illness cover, as well as the necessary amount of life cover to provide for their financial responsibilities, can make a real difference when it comes to preventing unnecessary financial strain and allow both parents and children to navigate this phase of life with confidence and enjoy its rewards.