Insurance can prove to be the most significant thing in your life when it is needed.
As a voice for the younger generation, I can confidently say that the majority of people under the age of 24 have little to no knowledge of insurance and how it works. This lack of knowledge is due to the education system not teaching young people a lot about how to manage their finances in the future. So why would someone my age want to take out insurance?
Benefits to your loved ones and your health
To put it in simple terms, insurance replaces lost income for your loved ones if you were to leave behind a spouse or children. But for someone my age, there are still massive ongoing benefits for taking out insurance. One benefit relates to health. While you are young you don’t have the severity or multitude of health problems as you may when you age, and you’re not at as high a risk of being diagnosed with them. Therefore, this makes you more eligible to receive your requested amount of cover as you will be less likely to make a claim.
My second reason to explain why taking insurance out at such a young age has great benefits is related to your premiums (payments for your insurance cover). There are two different premium structures: Level and Stepped. Having a Level premium at a young age is ideal, because while your premium may seem expensive at first you will have locked in a premium that only slightly increases over time and ends up being a lot cheaper than a Stepped premium, if the policy is kept in force for a long period of time.
A Stepped premium starts off a lot cheaper (and therefore may look like the best option), but it goes up at a rapid rate to meet the perceived risk of your age. In a lot of cases the person insured can’t keep up with their increasing premium payments and allow their policy to lapse when they need the cover the most. This once again highlights the importance of locking in cover from a young age.
Our team of specialists are here to give you advice on your insurance needs
Make a move towards securing your future today, contact Rethink Financial Planning to speak to one of our Financial Planning professionals. We’re a team of highly-trusted financial advisers in Newcastle and can offer you personalised financial advice to help you take control of your financial future.