Millennials shouldn’t be without income protection cover

to what you would do if you were involved in a car accident and disabled as a result, to the extent that you could no longer earn a living? Who would look after you? Whoever took on that role would bear a huge financial burden, because your living costs would probably include high medical expenses, so you would require more than what you were earning.

You probably have a certain degree of cover through your employee benefits package (which typically includes pension benefits and group life and disability cover). But such cover is likely to fall far short of what you would need, particularly if you have a career’s worth of salary cheques in front of you that you have now lost. And a group disability payout is typically in the form of a once-off lump sum.

Discovery Life has explored the insurance gap (the difference between what you need to be covered for and the actual extent of your cover) that millennials face, and in the process has come up with an acronym, Marouns, which stands for “millennials at risk of underinsurance”.

According to Discovery Life’s recently released paper on the topic, a 25-year-old professional earning R20 000 a month has an expected future income totalling R18 million. This takes into account inflation, as well as salary raises and promotions that such a professional would typically experience over a 40-year career.

Not only do Marouns display a “present bias”, giving little thought to the outcomes of their suffering a life-changing event, they also exhibit high levels of risk-taking behaviour, the paper says, coupled with a “naive sense of invincibility and under-appreciation for the probability of suffering a lifechanging event”.

Discovery Life’s statistics show that “almost 88% of millennial deaths have been as a result of behavioural, yet largely controllable, causes, such as car accidents”. And the young adult motor vehicle fatality rate is 60% higher than the average of all other age groups.

And while you may, if you have no dependants, be justified in not seeing the need for life cover, be aware that you are more likely to be seriously injured in a motor accident than to die in one.

Discovery Life says it is estimated that of the 145 000 graduates entering the working world at the end of this year, about 3 900 will suffer a life-changing event (disability, serious illness or death) before age 35, 10 000 before 45 and 23 900 before 55.

According to a recent study by a global reinsurer, millennials are more likely to take out travel and mobile phone insurance than life insurance. This