Here you are. Eventually with some money to channel towards responsibility. The question is: Do I invest in savings, pension or life insurance with your first step towards being a “grown-up”? And by grown –up, we mean financially grown-up. Financial priorities are personal, but if you are neither a trust fund kid nor a lotto winner, the following should be your order of priorities;
You can be 28 years old and just started a life insurance policy. At the same time you started saving for your retirement. 6 Months later you are diagnosed with some disease or you find your car (and your body) wrapped around a tree. The life insurance (life cover, dread disease or income protection) policy will pay the insured amount (R1mil or R5 mil or whatever you chose even though you only contributed premiums for 6 months). The savings plan will pay whatever you saved in 6 months.
Let’s hope you never get into a situation where you will need your life insurance to pay out. BUT, if and when you need it and you don’t have it….it is like not having a parachute when you need it….you are done. And so are those that need to take care of you and can’t afford it. Depressing thoughts but true….and it doesn’t need to be….THAT IS THE POINT!
When you are young and healthy, life insurance (life cover, dread disease, income protection, capitol disability etc.) is very affordable. The older you get and the more your health deteriorates, the more expensive it becomes. The point is, get the life insurance when you are young and healthy. When you are older and not as fit and healthy, it is way more expensive.