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September 9, 2020

What You Need to Know: Insurance Basics

Guest Author: Brittany Fisher

As a young adult, you have a lot of exciting things to think about. Formulating a career path, connecting with a partner, and choosing where you live are just a few of the new and interesting adult roles you’re getting comfortable with. Among the less exciting things you must do is make decisions about insurance. While it might not be the best part of adulting, it’s a critical part, so let’s take a look at what you need to know.

 

1. COVER YOUR ASSETS

There is one type of insurance policy that often introduces young people to the world of buying insurance: automobile insurance. Policies abound and providers are competitive, making it a pretty confusing decision. Because of this, U.S. News recommends shopping around for auto insurance quotes. You’ll need your car’s make and model, personal data for all the people you intend to insure, and driving record information. Keep in mind that even if you have a ding in your record, you can often lower your rates by taking a defensive driving course.

Another popular introduction to the insurance world is renters insurance. Sometimes these policies are required when you move into a new place, but sometimes they aren’t. Whether your landlord requires it or not, renters insurance is a wise choice for protecting your belongings. Policies can help you replace things like your TV, laptop, or furniture if they should be stolen or damaged. Read through the fine print to see if policies cover replacement or cash value—the latter meaning they take into account depreciation and pay accordingly.

Lastly, if you’re buying a home, you’ll need to look into homeowners insurance. As Kiplinger explains, these policies will automatically cover your belongings to an extent, as well as the house itself. You might need riders for particular valuables, like jewelry or fine art, and you will need to decide things like how large your deductible will be.

2. COVER HEALTHCARE

Healthcare is a must-have, and sometimes this insurance is provided through your employer. Other times, you need to shop through the marketplace to find the right fit. Either way, you’ll need to understand how plans are generally structured.

As NPR explains, there is an enrollment period for healthcare. The provider your employer uses will dictate this, or the state in which you live will have a particular time frame for enrollment. During that time, you will need to review the plans available and select the option that fits your circumstances best. Remember to look at your annual expenses, not just monthly premiums, and keep in mind that policies that sound too good to be true often are.

3. COVER YOUR LIFE

If you’re young and have no major health issues, you might think life insurance is a moot point. However, keep in mind that funerals cost in the thousands. Rather than saddling loved ones with that burden, life insurance protects those you care about from financial hardship.

There are a few key types of life insurance. Term tends to be particularly inexpensive, but just like it sounds, it does run out after a set number of years. Whole life is more costly, but it offers a cash value and it never expires. Survivorship and universal plans are also available, as well as no-exam policies. You should weigh your circumstances and needs thoughtfully as you sort the various options.

An option that many young people overlook is burial insurance. These are affordable policies that pay out quickly, and the benefit can be applied not only to your final arrangements but also to things like medical care costs or bills you leave behind. Before you dive in, be sure to do some research. You can read online reviews to get a feel for what’s available and how happy customers are. For instance, Lincoln Heritage Life Insurance Company has an A+ rating with the Better Business Bureau.

Shopping around in the world of insurance feels pretty complex, but a little research can go a long way. Think carefully about what is available and what you need to cover to find good solutions. For everything from your life to your valuables, you can find a policy to meet your needs.