Income First: Early Earners

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Pat's ticked off the responsible stuff by insuring his car and covering his health with a basic medical aid plan. And because he’s still living at home, he can spend most of his salary enjoying life.

At his father’s urging, Patrick has decided to speak to an independent financial adviser to look at his financial planning. Given his age, what should Patrick be prioritising right now? Patrick falls neatly into what life insurer FMI (a Division of Bidvest Life Ltd) calls ‘Early Earners’: mid-20s, single with no dependants, and little to no debt.

What are his financial needs, and what risks does he face? According to FMI’s 2019 Risk Stats, a 25-year-old male has a 92% chance of having a temporary injury or illness during their working career, a 37% chance of a critical illness, and a 15% chance of a permanent disability. For Early Earners, whose entire future earnings lie ahead of them, protecting this future earning potential against these risks has never been more important.

FMI Chief Executive, Brad Toerien, says Patrick’s needs are clear: to protect 100% of his hard-earned monthly income against life’s risks that can trip him up during his working career, like getting injured, falling ill, or being diagnosed with a critical illness.

"AN EARLY EARNER HAS 2 MAIN PRIORITIES  TO PROTECT THE INCOME THAT PROVIDES FOR THEIR LIFESTYLE TODAY, AND TO PROTECT TOMORROW'S BIG PLANS," SAYS TOERIEN.

Unfortunately, most South Africans tend to insure the wrong things. Each of us face four major risks in life: temporary injury or illness, permanent disability, critical illness and death. What many fail to realise is that of these, temporary injury or illness is the greatest risk, no matter what stage of your life you’re in. This means that without dependants (yet), Patrick has no need for death cover – despite industry norms that default to providing Early Earners with Life Lump Sum cover.

“THE IMPORTANT THING TO REMEMBER IS THAT NO MATTER WHAT STAGE OF LIFE YOU’RE IN, YOUR INCOME IS THE ONE CONSTANT YOU’LL ALWAYS NEED TO RELY ON, SAYS TOERIEN. YOUR INCOME IS MORE THAN JUST THE MONEY YOU EARN. IT PROVIDES FOR THE THINGS YOU NEED TODAY AND HOLDS THE FUTURES OF THOSE CLOSE TO YOU. IT’S WHAT YOU USE TO MAKE AN IMPACT AT EACH STAGE OF YOUR LIFE.”

Join us as we continue to uncover the needs of all Early Earners at each stage of their lives.


PWG Advisory Services (Pty) Ltd FSP nr. 44152 and PWG Short Term Advisors (Pty) Ltd FSP nr. 44153 are authorised financial services providers. © 2021 PWG Group. All Rights Reserved. Powered by Creative Joggie