Millennials often underestimate the need for income protection when they first enter the job market – at their peril.

Income protection is probably not the type of cover young South Africans consider when they embark on their careers, but it’s essential that they’re adequately protected against the future loss of income from day one.

Liberty’s latest Claim Statistics show that young South Africans – or  millennials – claimed mainly for income protection benefits in 2015, with retrenchments (15,9%), being the main cause of claim.

“As the South African economy struggles to regain momentum, we’ve seen a steady increase in retrenchment claims. This is a clear indication that even millennials face the risk of losing their jobs, yet there’s very little understanding as to why one should protect or insure their ability to earn and income,” says Henk Meintjes, Head of Risk Product Development at Liberty.

Meintjes says that income protection cover, although part of a broader lifestyle protection solution, should be the first thing that a young person should discuss with an accredited financial adviser.

“At the onset of your career, get an accredited financial adviser to walk you through the journey of what cover is relevant for you, at each life stage. At the start of your career, discuss income protection so as to ensure that you can continue to fund the lifestyle that you become accustomed to once you start earning a salary,” he says.

How does income protection work?
Injury, illness or retrenchment can occur suddenly and affect your ability to earn an income for an unpredictable amount of time. You’ll need to cover your living expenses to maintain your lifestyle during this period, as well as continue making contributions towards your savings and investments. Taking out income protection for a monthly fee will help you do this. You’ll then be covered and receive a specified percentage of your salary over the period that you’re unable to work and for up to six months following retrenchment.
Income protection benefits provide an income when you’re unable to work due to illness, disability or retrenchment.

If there’s one thing you do this month, “make sure you speak to an accredited financial adviser about protecting your income,” advises Meintjes.

What will happen to your Own your life Rewards

If you are a member of the Own your life Rewards programme you should by now have received notification that we are winding down the programme which will be discontinued next year on 31 March 2017.

For more information on this, please contact your financial adviser or visit www.ownyourliferewards.co.za.

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