In a world where financial security feels increasingly elusive, Bidvest Life’s 2023 Claims Report delivers a jarring wake-up call for financial advisers: the urgency to engage younger clients with robust income protection strategies.
The statistics are compelling: millennials aged 28-43 are 55 times more likely to claim their income protection benefits than their death benefits. This ratio dropped to 17x when looking at income protection versus death claims across all ages. This isn’t just data; it’s a signal that we are missing a critical opportunity to safeguard the futures of our younger generations.
As someone who has navigated the often murky waters of financial planning, I can attest to the struggles young people face in prioritising insurance. When I first entered the workforce, I was one of those who thought, “I’m young and healthy. Why do I need insurance?” That mindset almost cost me dearly when an unexpected personal issue left me unable to work for months. It was a harsh lesson in the fragility of life, but it’s one I hope others can learn from before it’s too late.
Nic Smit, Bidvest Life’s Product and Pricing Executive, emphasised that millennials accounted for a staggering 50% of all income protection claims in 2023. Yet, they only represented 12% of death claims.
This disparity underscores a vital truth: young people are not adequately protected against the risks that could derail their financial futures. Many financial advisers have built their practices around established clients nearing retirement, but as they age, there’s a dire need to pivot toward a younger demographic that requires tailored support.
Smit points out two significant misconceptions that young people hold: they think they don’t need life insurance yet and that it’s too expensive.
The report highlights that the earlier a person secures this coverage, the more affordable it becomes—a crucial point that could transform how young people view financial planning.
The report says 91.5% of all unique income protection claims were paid out in 2023. It also reveals that childbirth was the leading cause of income protection claims among millennials, while cancer remains a significant threat across all age groups.
This data highlights the urgent need for financial advisers to engage with their clients about not just personal circumstances but also family planning and health risks.
And let’s not ignore mental health, which was the fourth-most common reason for millennials claiming income protection benefits. In a world where 40% of Gen Zs and 35% of millennials report feeling stressed frequently, the need for a safety net is more pressing than ever.
The report states that for financial advisers, this is an opportunity not only to protect young clients but to establish long-term relationships. By incorporating child coverage into discussions, advisers can create a pipeline for future clients. Starting with a Child Protector benefit can lead to comprehensive coverage as these children grow into adults—essentially fostering "clients for life."
In a landscape where uncertainty reigns, the responsibility lies with us—financial advisers—to illuminate the path toward security. By leading with income protection and dispelling myths around its necessity and cost, we can equip young lives with the safety nets they need to thrive. The time for action is now, and it starts with understanding the profound impact of our choices today on the lives of those who will shape our tomorrow.
PERSONAL FINANCE