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Top Tips for Insurance and Financial Planning in Your 20’s

Tips for Financial Planning in Your 20’s

The school years are long behind you. You recently completed a Business Management course and have just landed your first job. Life is on the up, and at 20 years of age, you have your whole future (and financial future) ahead of you.

You may have your sights set on travelling the globe, or further, claim your independence by buying a feisty little Volkswagen Polo. You may move into your first apartment with one of your best friends. The excitement is palpable. Yet, the anticipation of this future also brings with it the undeniable angst of grown-up responsibilities.

For instance, what type of insurance cover do I need? How do I make the right decisions today to secure my financial future? Don’t worry, you are not alone.

All young adults must face new responsibilities that come with unseasoned independence. As a young South African, there is often the added responsibility of caring for your elderly parents.

According to Old Mutual’s 2017 Savings and Investment Monitor report, 37% of parents believe that their children should look after them when they’re old. This means you may need to investigate your parents’ medical aid and life insurance, to see what they have in place – if anything.

We have some easy-to-understand advice to share with you about insurance and financial planning – both of which are closely entwined. Here we break down it down into easy-to-understand tips. If you put these plans in place in your 20’s, you’ll look back at your life one day and smile at what you have achieved.

  1. Life and Disability Cover

Your 20’s are the prime of your life, but it is also when you are more at risk of being involved in an accident or road crash. Research conducted by Statistics South Africa in 2013, showed that death rates reach a peak between ages 20 to 34, with 42% of deaths in the 15 – 29-year-old age group resulting from non-natural causes. This means Disability cover should be a priority in your 20’s. The younger you are when tragedy strikes, the more you will lose in terms of income. This means the lump sum or monthly payment needed is far greater than that of an older person who may have retirement savings.

Life cover may seem strange to consider when you have so much life ahead of you. But, it addresses some or all the following financial needs:

  • Replaces lost income for your family
  • Pays off your student loan
  • Reduces the stress of paying off a funeral
  • Pays off debts owed by your estate


The younger you are when you take out Life cover, the less expensive your premiums will be.

A 2017 Princeton survey, found that 65% of 18 – 29-year-olds don’t have life insurance because they felt it unnecessary whilst young and healthy. Ironically, that’s exactly why you should be taking the cover out now – illnesses and conditions will almost certainly elevate your premiums and exclusions.

  1. Medical Aid

You’re fit, you’re healthy, so why the need for medical aid cover? The simple truth is that Medical aid isn’t just there to mend some head-cold or elevated temperatures. In your 20’s, you must consider the greater medical picture which may include the need for hospitalisation.

Medical aid covers your medical expenses if you need medical attention after an accident, for example. If you don’t have this cover in place, then you need to be prepared to rely on state health care facilities. Medical bills can pile up rapidly, especially if you or your family need an extended hospital stay.

You should follow the four steps of:


  • Knowing your health risk profile
  • Scrutinising the benefits of your scheme
  • Checking out the financial soundness of the scheme
  • Ensuring the affordability of the scheme is an effortless way to do your Medical aid research by comparing scheme and monthly premium options.

If you have the responsibility of looking after your parents’ medical needs, you need to investigate keeping up with their current medical aid payments. This can be less expensive than taking out new medical cover. If they don’t have cover, then you may need to choose a Medical aid scheme for your parents.

Medical aid cover can cost between R1,000 and R5,000 per month, which does not take late-joiner penalties into consideration. Again, this all depends on your specific budget and requirements, which is why obtaining several comparative quotes at should be your first port of call.

  1. Funeral Plan

No one in their prime, carefree years wants to think about funeral cover, but it is an unavoidable reality. Planning means that when the sad day arrives, you can give your loved one the dignified send-off he or she deserves.

Depending on the type of funeral cover you take out, the payout will be between R5,000 and R50,000. You must consider cremation, reception, and coffin costs, as well as the transport to the grave site, mortician, and funeral home costs. Funeral cover varies depending on your requirements and budget, but some may even cover medical bills that still need to be settled.

Having the right cover in place helps to ease the way for the family. No one wants added financial stress at such times.

  1. Home and Household Contents Cover

If you and your family have the privilege of owning your own home, then it is prudent to ensure that it is comprehensively insured. A house maybe your greatest retirement savings plan and is often left to the children when parents pass.

Home owner’s insurance and household insurance collectively cover permanent fixtures and fittings, physical structures, as well as ‘acts of God’ such as lightning, fire, and storms. Power surges are a prominent South African reality with the return of load shedding, which may adversely affect your appliances.

Regardless of if you own a house or are renting one, your household contents need to be insured. Damage or theft of these items can amount to thousands of Rands. Understanding contents insurance is important because they are called your ‘valuables’ for good reason. Put plans in place to protect them.

  1. Retirement Planning

Ask someone in their 40’s when they wish they had started saving for their retirement, and they’ll swiftly give you the answer you’re looking for:  most regret not saving for their retirement early. Start now! It’s the best decision you’ll ever make.

One of the most powerful factors that come into play is that of compound interest. Investigate those two words. Quite simply, it’s investment income that grows off its own growth. Age is on your side; don’t delay using it to your advantage. Retirement planning is not for older people. Be consistent with putting away whatever amount – big or small – you can afford. Investigate the types of retirement plans out there, and take what will be one of the most important steps to your financial freedom in later life.

Hopefully, these top tips have given you the guidance and motivation you need to take control of your financial future’s stability. Just considering even some of these key areas of Life cover, Medical aid, and Funeral cover will place you in good stead for a future devoid of nasty surprises.