One of the uniqueness of the financial behavior and mindset of young generation and millennials is their charm for investing from an early age.
A global study conducted by Schroders of more than 25,000 investors in 32 countries revealed that those between the ages of 18 and 37 (generation Z and millennials) save and invest nearly 16% of their annual income.
This is different from previous generations who tend to view the investment as a “side” strategy because the risks are considered large and unsafe, so they prefer to save in the form of life insurance, health insurance, and so on.
The same research revealed that those aged 38 to 70 years (generation X and baby boomers ) only set aside around 14-15% of their income for saving and investing.
So, which is more important, insurance or investment?
The answer is that both are equally important because they have a positive impact on financial regulation and form a good risk management system in the future.
Here are 3 reasons why it is important for young people to have insurance from an early age.
1. Provide Protection and Peace in the Future
Insurance, regardless of type, aims to provide us with protection and minimize the risk of going bankrupt/having to spend a lot of money at once when an accident or something unexpected happens. By having insurance, for example, you save to prepare for any possible accidents/illnesses in the future.
Say, at the age of 30, you develop a serious illness that requires surgery or major or serious medical treatment. You need to pay at least IDR 50 million to complete all these processes.
However, if you already have insurance, your insurance company will cover the cost of the treatment. That also does not include other benefits that you can get from the insurance company.
Not all of these emergency needs can be met with return on investment alone.
One of the disadvantages of investing is, if you want to withdraw your money/principal capital, it will take a few days for it to go directly into your account or into your pocket.
So, if your needs are very urgent, relying on investment as the only handle is not a wise thing.
2. Reducing the Chances of Debt
Well, when you have to spend large amounts of money at one time, but the amount of your savings or cash is insufficient, automatically, you have the potential to take out a loan or go into debt.
The possibility of debt will be minimized because the unexpected costs will be paid by the insurance company from the premiums you pay each month.
Insurance disbursement is also generally fast if you have followed the procedure.
3. Cheaper Premium
When you register yourself with an insurance company, there is a certain amount of money that you have to pay each month, which is called a premium.
The size of the premium that must be paid by each person is different, depending on the company’s policy that pays attention to your circumstances, such as age, occupation, illness, and so on.
Well, if you have insurance since you were young, the premium you have to pay is still small compared to when you signed up when you were old. That’s because young people are judged to have a lower risk of death or illness than older people.
After understanding the importance of insurance, what are you waiting for?
Come on, register yourself and buy insurance at the company of your choice. No need to be confused where to buy.