Understanding Insurance
Throughout your life you come to milestones where insurance is a given, while others are simply encouraged. How do we know which ones to purchase and when? Insurance is a financial contract between an individual and an insurance company that insures you are protected from financial loss in severe circumstances. Insurance is another ever-changing area of life. Throughout different stages of life will require different policies and different coverage.
Insurance In Your 20s
Health Insurance
Medical debt is one of the largest sources of debt among US consumers. Most people cannot afford healthcare on their own. This makes health insurance very important to consider as you roll off your parent’s plan and enter your adult life. Fortunately, many companies provide health insurance plans for their employees. Health insurance is one that you will most likely always have.
Auto Insurance
In most states, auto insurance is required. There are different amounts of coverage that you can purchase, like liability and full coverage. Rates for auto insurance are tied to age, car make and model, driving record, location, and sometimes gender. If you are driving a car, you will need auto insurance.
Renters Insurance
If you are renting a home or an apartment, you will need renter’s insurance. Most properties require their tenants to have renter’s insurance. Renter’s insurance protects you from natural disasters, theft, and more.
Disability Insurance
This provides income should you be disabled and unable to work a job. If you are reliant on a paycheck to support yourself or your family, disability insurance is worth the expense. Employers typically offer policies for traditional workers, while self employed people take out an individual policy. Disability insurance should be prioritized until you exit the workforce and rely on your savings to live through retirement.
Insurance In Your 30s
Life Insurance
The age at which someone becomes dependent on you, for most in their 30s, is the age encouraged to get a life insurance policy. This could be a spouse, aging parents, or children. There is term life insurance and permanent life insurance. Term is when the policy runs out after a certain period and is typically recommended because it is affordable and straightforward.
Homeowners Insurance
When you purchase a home, it is wise to consider homeowners insurance because it covers everything from liability to the structure itself. Most mortgage lenders require you to have homeowners’ insurance. If you live in wildfire, tornado, or hurricane prone area, there will always be a higher premium.
Pet Insurance
At the end of the day, you might be willing to spend $10,000 if it means your dog will get better. This is not a necessity but could be worth considering for some people. Some plans cover up to 90% of your routine visits and vaccinations.
Insurance in your 40s
Long-Term Care Insurance
This may be a good idea for those who are aging or disabled and need professional help with daily functioning. Keep in mind that as you age you are more expensive to insure. It may be a good idea to consider long-term care insurance well before you need it, even if you think you may never need it.
To be insured is to protect you as an individual and anyone dependent on you in the face of perils that no human could afford. It can be confusing as you enter adulthood to know what is vital and what is not. Having the knowledge of what insurance is most important in your stage of life will bring a sense of security and peace to you financial well-being.
Matt’s Corner
