Money management is a key skill to learn at any age, and even more so when young. With insurance being a key part of a bigger picture, it’s a good idea to talk to your kids about its role in their life.
Here are some tips to start the conversation.
Young people’s first experience with insurance is likely to come when they first own a car and need to consider how they will get cover for it.
This can be quite an in-depth process for young drivers, who often must balance relatively tight budgets with higher premiums and sometimes bigger excesses than older drivers.
This sort of negotiation and conversation will help kids to understand the different factors that insurers use when they assess risk, and the levers that can be pulled to make the policy work for both the provider and the insured.
Similarly, when they go flatting, they may consider contents insurance for their things and to protect themselves against any damage to the property that they have to cover.
While having these conversations, you can take the opportunity to explain how insurance works generally and how it can be a useful part of their financial lives.
While young people are often not particularly focused on the long term, it can be useful to talk to your children about what their plans are for the next 10 or 20 years. If they’re saving for a big goal, what protection do they need to have in place to make sure that they don’t fall off track? If they’re taking on a debt, it can be a chance to talk about the insurance they might need to ensure that could be paid, whatever happens.
Unpaid debt in a person’s younger years can have repercussions for a surprisingly long period of time afterwards, so it’s a good reminder for kids to have a back-up plan in case things don’t work out the way they expect.
Also, for many younger people, their main asset is their future ability to earn, so it can be very important to insure. The benefit is that the younger you are, the greater level of cover they’re likely to secure. As they get older, they may develop health problems that could be excluded or make insurance costs higher. But if they take out insurance when they’re young, and keep the same policy over time, any medical issues they may experience later on would likely be covered.
While life insurance and income protection often aren’t top of mind for people starting out in life, it’s never too early to start discussing the idea of insurance and how it can help throughout their lives.
The experience of Covid-19 has highlighted that things often don’t work out quite how we expect, so having a rainy-day fund in place can make all the difference.
Many people who thought they were heading overseas for a year or two quickly had to decide whether they wanted to hunker down and ride out the pandemic in another country or find the way to pick up and go home.
The uncertainty of recent years makes it clear that as well as official insurance products, people might need their own self-insurance in the form of an emergency fund in the bank that can be tapped into when they need it.
Get in touch. We can help you explore your options and protect your family’s future.
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