Most of what I write about lives in the world of retirement and investing. Today I want to talk about something we tend to skip over entirely — protecting our children’s income the moment they start earning it.
When I began my career, most of us worked for corporates with a pension or provident fund, and tucked inside that fund was usually life cover and disability benefit, often without us even asking for it. Today, that safety net has largely disappeared. Smaller businesses in particular rarely offer it, which means the responsibility now sits squarely with the individual — often a 22 or 25-year-old who has never been asked to think about it.
Of all the risk benefits available, I believe income protection is the most important by far. Here’s why: you can lose your ability to earn through illness or injury and still live a long, full life. That’s not a tragedy in the dramatic sense — it’s simply a long life without an income. And when that happens, who carries the cost? The state? A spouse? Your own children one day? None of us want to be on either end of that arrangement.
Let’s look at the numbers. A 25-year-old earning R30,000 a month, with income growing at 6.5% a year until retirement at 65, will earn roughly R63.2 million over their working life. That’s the asset we’re talking about protecting. To insure it costs in the region of R300 a month — about R3,600 a year.
And the likelihood of needing it is far higher than most young people assume. For a healthy, non-smoking 25-year-old male, the risk of being unable to work for more than 14 days due to illness or injury before age 70 sits at around 92%. Permanent disability risk is closer to 15%, and critical illness around 37%.
These aren’t figures meant to alarm — they’re simply the reality our children are stepping into without the structures we once had. This is a conversation worth having early, gently, and often. Not because insurance is exciting, but because it buys the one thing none of us can otherwise guarantee: the ability to keep providing for the people we love, no matter what life throws at us.
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Dirk Groeneveld, Certified Financial Planner
t. 083 261 9287
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Disclaimer:
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