The smart move: How having life cover when you’re young is a power play for your future

Concerts, weddings, and wild adventures – your crew is making memories. What about your future? Life insurance may not be on your radar yet but locking it in early could be the smartest financial decision you ever make. This Savings Month (July), Discovery Life shares insights on why young professionals should consider the invaluable benefits of life cover.

Protecting your phone and car against the unpredictable is second nature, but what about protecting your most important asset – you?

When you’re in your early 20s to mid-30s, life insurance is probably the last thing on your mind. It’s easy to think, “I’ll deal with that later”; “I already have cover through work”; or “I’m healthy now, so I’ll wait”. However, waiting for ‘later’ could come at a large cost to those with the majority of their future earnings still ahead of them.

Do you have a plan if you’re no longer able to earn a salary due to a life-changing health diagnosis or a permanent disability? How would you pay your rent or bond, for groceries, medical aid, car and family responsibilities?

“What many young people are unaware of is that life insurance offers far more than just cover that pays out when someone passes away. Life insurance is an incredibly powerful tool and can be a financial safety net if a severe illness or disability stops an individual from being able to earn an income,” says Gareth Friedlander, Discovery Life Deputy CEO.

Younger than 30? You’re probably underinsured

A 2022 Association for Savings and Investment South Africa (ASISA) Life and Disability Insurance Gap Study revealed that the average income earner aged 30 and younger is underinsured. This means they will be unable to maintain their own, or their dependants’, current lifestyle if they become disabled or pass away. The average income earner aged 30 and younger earns a little over R10,000 per month, but typically needs more than R2.7 million in disability cover to maintain their standard of living post claim. On average, they only have disability cover of around R1 million, leaving an insurance gap of R1.7 million.

“The insurance gap for South Africans under 30 is concerning,” says Friedlander. “Having holistic life cover in place that includes income protection, severe illness cover, and disability cover when you're young is one of the smartest things you can do.”

How living benefits are an insurance lifeline for young people

“Along with paying out an insured amount to your loved ones if you pass away, life insurance can also protect you against financial risk if something unpredictable happens while you’re alive,” explains Friedlander. The three main ‘living benefits’ are income protection, severe illness cover, and disability cover.

Income protection

This benefit pays you a regular income if you are unable to work due to injury, illness or disability. Discovery Life’s Income Continuation Benefit automatically provides comprehensive whole-of-life financial protection rather than expiring at retirement age and provides boosted payouts on permanent disability.

Severe illness cover

Severe illness cover pays out a lump sum based on the severity level of the illness and can be used to cover costs such as treatment costs and lifestyle modifications. “Some of the key features of our Severe Illness Benefit at Discovery Life are comprehensive multiple claims cover, cover for both early‑stage cancers and relapses, additional payouts to access the best treatment globally as well as automatic cover for your children and parents,” adds Friedlander.

Disability cover

Disability cover pays out a lump sum if you become disabled. It can help cover any associated costs such as buying or maintaining specialised medical equipment, lifestyle modifications or settling debt. Friedlander notes: “Our LifeTime Capital Disability Benefit provides you with additional payouts upfront and over time to help you access cutting-edge medical technology to help minimise the impact of the disability on your lifestyle.”

What does the data say about young people and life cover claims?

Alarmingly, severe illnesses like cancer are increasingly affecting younger people.

Over the past 30 years, cancer rates in the G20 nations (which includes South Africa) have increased faster for 25 to 29-year-olds than any other age group – by 22% between 1990 and 2019. Rates for 20 to 34-year-olds in these countries are also now at their highest level in 30 years. This is according to the Financial Times, which analysed data from the Institute for Health Metrics and Evaluation at the University of Washington School of Medicine.

Discovery Life’s Claims Experience for the 2024 calendar year shows that for severe illness claims, cancer was the leading claim cause at 41%, with heart and artery claims next at 16%, followed by nervous system claims at 13%. Of the severe illness cancer claims, skin cancer was the top cause among men aged 40 and younger (44%), while breast cancer accounted for 43% of cancer claims among women aged 40 and younger. Cancer was also the largest claim cause for disability claims in this age group (29%).

Friedlander adds that two in five income protection claims were paid to clients aged 40 or younger in 2024. One in four of these were for permanent conditions. However, these permanent claims made up 67% of the total rand amount paid out. This highlights the value of income protection, especially for permanent claims where these clients will receive an income going forward. Musculoskeletal claims make up almost one-third of these claims and include, for example, injuries to or surgery for the back and neck, ankles, hands, etc.

While living benefits are important, it is still important to have life cover where people have parent or child dependants or debt. Of the death claims in 2024 for those aged 40 and younger, motor vehicle accidents (18%) were the largest cause, followed by heart and artery conditions (16%), and then cancer and trauma, each contributing 14%. For these younger ages, 42% of life cover claims were due to unnatural deaths, highlighting the uncertainty of life.

“Taken altogether, these insights highlight the growing importance of holistic life cover for young people that includes living benefits,” notes Friedlander.

Discovery Life’s unique approach to life insurance

“Discovery Life’s unique Shared-value Insurance model allows us to reward clients based on how well they managed their health and wellness. We paid R2.4 billion in shared-value benefits, comprising R1.4 billion in PayBacks, and R1 billion in Cash Conversions. I’m proud to say that 2024 was the first time Cash Conversion payouts reached the one-billion mark in a single year,” highlights Friedlander.

This is powered by clients’ engagement in Vitality – Discovery’s behaviour-based programme that incentivises healthy living to reduce mortality and morbidity risk. This lowered risk creates previously untapped value that can be returned to clients to incentivise them to continue engaging in healthy behaviours.

The younger and healthier you are, the cheaper your premiums

“Young people also need to know that life insurance premiums are mostly determined by age and health. The younger and healthier you are when you apply, the cheaper your cover is,” explains Friedlander.

When you take out life insurance at younger ages, your risk is lower, and you can spread the payments over a longer term. This means that your premiums at earlier ages subsidise your premiums later, resulting in more sustainable premiums at older ages. Waiting to take out cover until you're older or after you’re diagnosed with a chronic condition or severe illness means higher premiums or potential exclusions from cover entirely.

“Not only does getting life cover when you’re young protect your future self and your loved ones, but it also sets a solid foundation for long-term financial wellbeing. Getting life cover when you’re young isn’t just about planning for the worst. It’s about making a confident move that secures your financial journey and your ability to protect what’s most important to you. Future you will thank you,” concludes Friedlander.