By: Kresantha Pillay, Chief Specialist for Risk Products at Liberty

While attitudes toward savings and insurance in South Africa match global trends, the question is, are they actually valid

Many young professionals under the age of 35 in South Africa prioritise putting their spare money into investment savings, rather than insuring themselves against critical life events.

July is Savings Month and according to research by financial services provider Liberty, which is part of the Standard Bank Group, some 90 000 clients under 35 use the insurers investment offerings. Another 230 000 clients in this age group also use Liberty’s Stash Savings app. In contrast, only around 6 000 have taken out life insurance, while around 30 000 have some form of lifestyle protection, such as critical illness and retrenchment cover.

These figures are not unexpected, they show that young professionals in South Africa are essentially following global trends when it comes to managing their financial futures.

What research by global insurers shows is that while many younger professionals understand the value of life insurance and other long-term insurance offerings, they are put off by the long term commitment and nature of these policies, because they feel they are healthy in the moment, and are already overwhelmed with new responsibilities like paying off a house and building a career.

This is known as present bias, where coping with current stresses takes priority over planning for the future. Along with this focus on the present, the research also reveals an attitude that life insurance is expensive and more suited to established families who might have more to lose.

These perceptions, however, are not necessarily the whole truth according to Liberty.

“It is commendable that young professionals in South Africa are highly sophisticated savers, and they understand how money works. But there is a critical piece of the equation missing here,” says Kresantha Pillay, Chief Specialist for Risk Products at Liberty.

“This missing part is ensuring that they are financially protected from adverse serious life events which can have a real impact on an individual’s earning potential.”

While younger people are less prone to illnesses and death, serious vehicle accidents and retrenchment tend to be higher in this group she notes.

“Overall, with 2.2% of our insurance claims in 2024 coming from people under the age of 35, it is evident that death, disability, and critical illness can affect anyone, regardless of age,” she says.

In terms of life insurance, Pillay believes it is important to encourage younger professionals, particularly those who have taken out loans and business debts, to take up life cover so these debts are not passed on to family members if the worst were to happen. Life cover also offers families the chance to continue the legacy of their key earner, should they pass away.

“One advantage of taking out life cover and other types of long-term insurance while you’re still young is that premiums are normally cheaper. As insurers we understand that younger people are generally healthier; this contributes to reduced premiums and can be considered as a big saving for the future and an intelligent step towards protecting yourself and the future of your family,” she says.

Pillay also advocates insuring broadly against a loss of earnings due to unexpected financial shocks like retrenchment or injury.

“Comprehensive cover is a great way to make sure you keep your lifestyle and future plans on track, whilst ensuring that you can rebound from life’s unexpected events, no matter what.”

She says anyone under 35 looking to take out cover should consult a Financial Adviser.

“Financial advisers play a crucial role in helping people clarify their needs, act, and stay the course. They are the architects of financial futures through providing personalised cover options and many other critical financial services,” she says.