The Importance of Taking Out Life Insurance Early On

December 17 - If a person is in his 20's, the last thing on his mind is is life and disability insurance.

However, the Association for Savings and Investment in South Africa (ASISA) is advising young people to take out life cover early in their lives.

According to the Chief Executive Officer of ASISA, Peter Dempsey, the younger and healthier one is, the lower the cost of premiums.

Should a person suddenly develop an illness later on in life, the chances of finding an affordable life insurance policy greatly decreases.

This is because the higher risk a person poses to the insurance company, the higher the cost of cover.

Dempsey said: "You may not yet have dependents or mortgage bonds. But what you probably have is good health and a low risk profile, meaning that insurance companies are prepared to provide life cover at very affordable rates."

There are a number of factors that keep insurance premiums down, such as being female, being a non-smoker and, yes, being younger.

A person who takes out a life insurance policy with level premiums will be able to keep those same premiums for as long as the life insurance policy is valid.

A young, healthy 25 year old is considered a low risk and could pay as little as R170 a month, with level premiums guaranteed for 10 years on a R1 million cover.

The same person will pay R215 a month at the age of 35, as his risk levels go up. By the age of 55, the could be paying out R830 a month on life insurance.