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Insurance plays a crucial role in protecting us from life’s surprises, whether it’s a medical emergency, a car accident, or property damage. Taking the time to review your insurance options early can provide peace of mind and help you stay ahead of potential challenges. The right coverage shields you from costly financial and legal issues during unexpected situations. Here’s a closer look at the essential types of insurance you should consider to stay prepared and protected.
- Insurance is a way to manage risk by transferring it to an insurance company, which takes on the financial burden in the event of a covered loss.
- Types of insurance include life, health, auto, home, disability, and business insurance.
- Each type of insurance has its own set of coverages and exclusions.
- To choose the right policy for you, consider what you want to protect and how much coverage you need.
- It is important to weigh your options when shopping for insurance policies.
Health Insurance Plan
The cost of medical care can be high. Medical bills for a single instance or long-term illness can reach tens of thousands of dollars or more. For uninsured individuals, paying for pressing medical bills with credit cards can lead to ongoing financial hardship and a cycle of debt that is difficult to escape.
Even healthy, young adults require a quality health insurance plan. This plan should cover the costs of health care like preventative services, routine doctor visits, and emergency care. If you don't yet have a full-time job that offers health insurance, and you aren't covered under a parent or guardian's policy, it's essential to shop around for your policy.
To find the best policy with affordable monthly premiums, you have options. You can use an agent to assist you in navigating through your choices and selecting a deductible and coverage limits. Alternatively, you can go to the federal health insurance marketplace or contact insurance companies directly. An agent or broker can be particularly helpful if you need guidance in understanding your options and making informed decisions.
Auto Insurance
Most states require all drivers to carry an active car insurance policy. You could face penalties for breaking the law and driving without insurance. There is also the potential cost of damage and medical expenses you are responsible for if you are found at fault for the accident.
Insurance companies offer a wide range of coverage options. You need to check to find out what your state’s minimum coverage options are when deciding on a policy to make sure you meet these requirements. When it comes to car insurance, you have the following choices:
- Liability coverage is often the minimum coverage required by the majority of states. This type of auto insurance helps to pay for the cost of property damage and injuries to others when the accident is your fault. It also pays for legal costs if you happen to be sued.
- Uninsured or underinsured motorist coverage (UM/UIM) pays medical expenses, lost wages, and other compensations to you and your passengers to cover your losses, if an uninsured or underinsured driver is at fault. Car damage is covered under this policy in some states.
- Personal injury protection (PIP) helps to pay for medical expenses, lost wages, and more for yourself and any of your passengers regardless of fault.
- Medical payment coverage provides some coverage, typically between $1,000 and $5,000, towards medical expenses for you and any passengers, no matter who caused the accident.
- Comprehensive insurance helps to cover repairs and replacement necessary after theft or damage to your vehicle caused by vandalism or an act of nature, such as a weather event, falling object, or animal strike.
- Collision insurance is another optional coverage. It pays for the repairs or replacement of your vehicle following an accident, regardless of fault.
While every driver must hold the minimum insurance, it can be beneficial to purchase additional coverage if your budget allows for it. You may pay more in monthly premiums, but it pays off if you need extensive repairs or a replacement car.
Renters Insurance
Did you know that there is insurance for renters? As a young adult, you likely don’t yet own a home that requires a homeowners insurance policy, but renters insurance is important for this stage in your life. Some rental agreements even require it.
As the tenant, your personal property is not covered under the landlord’s insurance policy. Renters insurance pays to replace damaged or stolen belongings such as furniture, clothes, and electronics. Some types of covered damages include losses as the result of a fire or a tornado.
Renters' insurance includes liability coverage that pays for another party’s injuries and damage to their personal property caused by your negligence. Another benefit of purchasing this type of insurance is that it pays for temporary lodging costs if your rental is unlivable due to a covered problem.
Travel Insurance
Your youth is the perfect time to do some traveling and explore new places. Maybe you take a year off to backpack with friends, or perhaps you decide to study abroad for a semester. Any traveler can benefit from this insurance coverage. Travel insurance can pay for trip cancellations, travel accidents, medical expenses, lost luggage, and even some personal emergencies like a lost passport.
Long Term Disability
Disability insurance isn’t just for people with dangerous jobs. Any number of circumstances can leave you disabled and unable to continue to work, such as an illness or accident. Disability insurance protects you by replacing a percentage of your income, usually between 40% and 70%, and should be part of your personal finance plan. It is especially important if you have any dependents that rely on you to provide their support and basic needs. Keep in mind that there is normally a waiting period before your insurance provides these financial benefits and a cap on how much you can receive.
Long Term Care
Long-term care is typically thought of as a need for older individuals, but you can never predict what will happen in your life. Anyone of any age may find themselves facing an unfortunate illness or injury that leaves them needing daily help with the most basic things. Long-term care helps to cover the costs associated with in-home assistance for daily tasks and personal care, nursing home care, and other types of assisted living.
Purchasing a long-term care insurance policy when you are young is a smart move. You can often get covered more easily, and lock in lower rates that last throughout your lifetime, drastically reducing the cost of this essential coverage.
As a young adult preparing for your future, you have a lot going on. Having the right insurance coverage gives you peace of mind. When you know you are protected, you can focus on your studies and work, instead of worrying over what unexpected disasters life may bring.
Term Life Insurance
You may not be considering a life insurance policy at your age, but your younger years are the perfect time to find great rates. Life insurance is necessary to provide for your loved ones if you unexpectedly pass away. The person you name as your beneficiary receives the death benefit and can use that money to pay for funeral costs, debts, and their own support. There are two types to choose from.
Permanent life insurance is coverage that lasts your entire lifetime. It provides a death benefit, along with a cash value that builds over time. You can access this cash value if you need extra funds for an important expense. Most people leave the cash value intact to use during retirement or to increase the death benefit for their beneficiary.
The other type of policy is term life insurance. This one gives you coverage at a locked-in rate for a pre-specified length of time. Term lengths usually run from 10 to 30 years. While your policy is active, your premiums remain the same. If you pass away during this time, your designated beneficiary receives the death benefit. Once the term length is at an end, you are no longer covered unless you renew the policy.
Term life insurance benefits pay for more than just funeral expenses. It is good for anyone who wants to provide a lump sum to cover a debt they may leave behind, such as college tuition or credit card debt. Not every type of debt is forgiven if you die, especially if you have a cosigner who is also legally responsible. Purchasing a term life insurance policy covers the costs of your known expenses and debts so you don’t leave behind a financial burden for your loved ones.
Choosing the policies that offer the greatest value is important to manage your finances and stay within your budget. For help managing the other major expense in your life. Whether you are currently enrolled in college or figuring out the best ways to pay for your tuition, no doubt you can find the solution that works for you.
