By: Koketso Ntsoane
YOU’LL be forgiven for thinking life’s immediate needs are the ones our wallets must prioritise. Rent, groceries, school fees, transport, and so on, have become financial staples in just about every household.
So fixated are we on these costs, we tend to forget to take a step back and see the bigger picture. This is especially true for households headed by younger breadwinners – those who don’t tend to think about their financial futures or how they should financially protect their loved ones from unpredictable tragedies.
In a country where the economic landscape is constantly shifting, young breadwinners find themselves at the forefront of financial responsibilities for their families. The pressures are significant, but with the right products and advice, they can secure financial peace of mind for themselves and their loved ones.
The reality is that many households are youth-led, with breadwinners ranging from 15 to 34 years old. This underscores a critical issue: young individuals are increasingly shouldering adult responsibilities, often without adequate support or advice.
This trend is compounded by a record-high youth unemployment rate, which exceeds 45% according to Statistics SA. The challenge is particularly acute in rural areas and informal sectors, where job security is minimal, and wages are lower.
This puts extra strain on breadwinners who can no longer count on their younger family members to find gainful employment. In this context, life insurance and funeral cover become essential tools for young breadwinners to protect their families from financial instability or even ruin.
For any young breadwinner confused about the overwhelming options available with life and funeral cover, here are a few tips on what to focus on:
Navigating funeral cover vs life cover
While both products serve to protect your beneficiaries in the event of your passing, they address specific needs and should ideally complement each other in a comprehensive financial plan.
Many people mistakenly rely on life insurance for funeral expenses, but it doesn’t work that way. Life insurance and funeral cover each serve distinct yet complementary roles in protecting your financial future.
At its most basic level, funeral cover ensures that your immediate needs are met during difficult times without disrupting your long-term plans. In contrast, life insurance helps you stay focused on the legacy you want to leave for your family, business, and community.
So, what are the pros and cons of each option:
Funeral cover:
Pros:
Affordability: Generally cheaper than life cover, making it accessible for young people on a budget.
Peace of mind: Ensures a dignified funeral without financial strain on the family.
Extended coverage: Some plans may include dependants like children or parents.
Cons:
Limited protection: This does not replace long-term income; dependants may still struggle financially.
Life cover:
Pros:
Financial security: Provides a lump sum to beneficiaries, helping with living expenses, debt, or education costs.
Peace of mind: Assurance that family is financially protected.
Investment potential: Some policies offer investment components, potentially increasing the payout.
Cons:
Higher cost: Premiums are generally higher than funeral cover.
The importance of both financial products. Whether it’s funeral cover, life and health insurance, or income protection cover, these products offer a crucial layer of protection. They allow you to confidently pursue your career, take care of your family, and contribute to society without fear of leaving loved ones financially vulnerable.
Making an informed decision
For young breadwinners, the decision between funeral cover and life cover depends on several factors, although ideally both would be put in place.
Financial Dependence: If you have dependants, life cover is crucial for their long-term financial security.
Budget: Funeral cover may be a more affordable starting point.
Future Plans: Consider life cover if you plan to start a family or purchase a home.
A wise move might be to start with a funeral cover and add a life cover as financial circumstances improve. This strategy ensures immediate protection while allowing for more comprehensive coverage over time.
* Ntsoane is the key accounts manager at Metropolitan Life.
PERSONAL FINANCE