Adulthood is defined by responsible behavior and prudent decision-making. You need to get a job, save your money, pay your bills, and care for others. Add to these hallmarks of maturity another action: protecting yourself with insurance. Here are all the types of insurance you DEFINITELY need.
Think of insurance as a life jacket. It’s frustrating to wear (or pay for) when you don’t need it, admittedly. But if you hit an emergency – even if it’s just once – you’ll be extremely thankful for that life jacket. Navigating your life without insurance means you are only one car accident, illness, or natural disaster away from financial misery.
According to the Kaiser Family Foundation, medical debt is consistently responsible for nearly half of American bankruptcies. Health insurance protects you by covering many of your medical costs.
If you’re young, healthy, and single, you probably don’t need as much coverage as someone with chronic health issues or children. There are ways to select high or low deductible plans to make health insurance more affordable for your budget while still meeting your medical needs.
You wouldn’t want to pay for an $18,000 C-section or $50,000 surgery all on your own, right? Your health insurance policy protects you from debt and, by enabling regular care and maintenance, makes it easier to stay healthy.
You don’t want to think about your death, but since it’s guaranteed to eventually occur, it’s silly not to purchase life insurance. Of all the types of insurance, this form doesn’t help you directly, but it does protect your family by replacing the income you contribute to the household. You’d want your loved ones to be financially covered, in case the worst happens, right?
Cost of policies varies greatly, depending on the insurer and type of insurance (term or whole life) you buy. But in general, life insurance gets more expensive as you age, so it’s best to purchase your policy when you’re young and healthy.
Property insurance covers your home, whether you own or rent, and your possessions. This is an absolutely essential form of insurance because it protects your largest investment and most valuable assets from damage, theft, and other threats.
Just be sure to read the fine print of your insurance policy! Some insurance companies don’t automatically cover natural disasters like floods, earthquakes, or fires. You don’t want to learn that for the first time after a disaster occurs. You may need to purchase extended dwelling coverage with your policy to get the extra protection you need.
Unlike health insurance, auto insurance is not a voluntary coverage: Most states require car-owners to have it. However, chances are that you’d want to keep auto insurance even without mandatory laws. The average loss per claim on cars is nearly $5,000, and without insurance you’d have to pay every cent of that loss out-of-pocket.
Auto insurance is a relatively affordable investment that delivers significant benefits after any type of auto incident:
- Collision coverage pays to repair or replace your car if it’s damaged or destroyed in a wreck
- Comprehensive coverage covers all of your auto losses not caused by wreck, such as from theft, fire, or hail
- Liability coverage covers the costs of any injuries or damage to another party that you caused in a collision
Keep in mind that the exact cost of your monthly or quarterly auto insurance premium varies based upon your driving history, credit score, age, type of vehicle, and many other factors.
A Few Insurance Tips to Keep In Mind
As you shop around for the best insurance policies and begin to purchase your layers of protection, keep these tips in mind:
- Ask your insurance provider about cost-cutting methods like auto-pay or accident forgiveness. Most providers offer multiple discounts but won’t give you the information until you ask.
- Steer clear of gimmick policies like accidental death insurance, mortgage life insurance, and flight insurance. These policies just want your money; the emergencies they cover often fall under the umbrella of other insurance policies you already have.
- Re-evaluate your insurance policies as you get older. You might be able to find a more affordable auto insurance or homeowner’s policy after you demonstrate a history of responsible behavior.
Or you may need to adjust the dollar amount of coverage to keep up with inflation or increasingly valuable possessions. However you do it, make sure you’re covered!
Don’t wait to get out of debt! Read this: A Complete, Step-By-Step Guide to Get Out of Debt.