When it comes to the world of insurance, many millennials feel one of two ways: they’re too young to need it or it’s overwhelming to deal with.
In addition, the very idea of insurance is viewed as an extra expense that doesn’t offer immediate benefits and usually gets put on the financial needs back burner.
I can certainly relate. In my 20’s, I dreaded having to pay for anything that was not viewed as absolutely necessary and most insurances were in that category. Besides car insurance for my vehicle, what else could I possibly need until I was a lot older?
Many millennials today have a similar viewpoint regarding coverage.
Millennials vs. Insurance
Millennials, also known as the Young Invincibles, has largely turned away from purchasing key insurances for several major reasons: alternative viewpoint on its necessity (why purchase health insurance when you can eat a balanced diet and exercise to keep yourself healthy?), the use of corporate jargon is seen as untrustworthy and of course, cost.
The problem is many millennials do need several different types of insurance to make sure they are protected against the hiccups in life that they are not invincible against. These bumps in the road highlight the very real need of having the right insurances set up during your young adult years as your cash flow is lower and your responsibilities and liabilities continue to grow.
For many, the overwhelming part is not only the nitty-gritty details of insurance but which ones to select in the first place. To help with the decision-making process, here are 5 types of insurances you will need now to protect yourself and your financial future.
1) Life Insurance
As your everyday life expands, so do your concerns. From career fluctuations to a suddenly expanding family, life insurance provides the necessary supplementation of income should something unexpectedly happen to you while you have dependents.
The two most popular versions of life insurance are Term and Whole Life or Cash Value. Term insurance provides you with a specific amount of coverage for a specified amount of years (or term) i.e. $500,000 face amount (or coverage amount) for 10 years. The purpose of term insurance is to provide protection during the times you need it most: when you are young, have dependents, have debts and are building your savings. Once these responsibilities and liabilities diminish, the idea is you no longer need life insurance coverage. Term insurance is cost-effective because it is simply “pure” insurance with no bells or whistles attached and is easy to understand.
Whole life (or Cash Value) policies offer coverage for your entire life and come with a savings vehicle attached (the cash value portion). The whole life policy premium is often more expensive than term due to the cash value portion. This type of insurance was created so coverage would never run out however it is more complex.
To begin your life insurance journey, check out Ethos which has created a “truly online” process for getting life insurance. A large majority of applicants can get approved online with no phone call or physical needed. If you’d prefer to shop around more you could check out Policygenius as well.
If you’re wondering how to determine the proper coverage amount for you, read why DC got a million dollar life insurance policy in his 20s.
2) Car Insurance
With a new set of wheels, all sorts of expenses are added to the list and sometimes that includes unexpected fender benders. Buying car insurance is a legal requirement if you have a vehicle, but the actual coverage you purchase can vary significantly on what it does and doesn’t cover.
In the U.S., buying car insurance can be an ordeal as there are so many options to select and know about. Ranging from liability insurance to under-insured motorist insurance to Personal Injury Protection (PIP) Medical Expenses insurance, the list is extensive and can quickly become overwhelming and expensive. Car insurance premiums can creep up on the higher side for many reasons, but the most common are driving history, age, the intended use of the car (business or pleasure), make/model, and sex.
When purchasing car insurance be sure to check out all of the options available to you. In addition, assess what your deductible (the amount you have to pay out of pocket in the event of an accident) would be.
Do you belong to a registered association or organization? Then be sure to investigate the possibility of discounts on your car insurance premiums. Also, look into insurance bundling options for discount opportunities.
3) Health Insurance
Your health is a top priority and when a medical concern enters the picture having the proper health insurance in place becomes a major weight off your shoulders. Also, with rising healthcare costs across the nation, health insurance is a must to have in place. Let’s not forget that in the United States it’s a legal requirement to have health insurance.
When searching for the right health insurance plan find out what the plan truly covers. Are vision and dental included? What are your deductibles? Are there are any co-payments? May you go to any doctor, clinic or pharmacy that you choose? What are the special medical conditions covered i.e. pregnancy and physical therapy? These are all important areas to review when selecting the right health insurance plans.
Are you a full-time entrepreneur on the hunt for amazing health insurance? Read this article geared towards helping freelancers select the right health insurance.
If you have health insurance you more likely than not have a high deductible health plan (HDHP). Because deductibles are so high with these plans, it’s essential to build a “medical emergency fund” through a Health Savings Account. The good news is that a Health Savings Account offers tax benefits. See why we think an HSA is the best retirement account.
4) Renters or Homeowners Insurance
If you have a place to lay your head, protecting your space in case of an unforeseen occurrence is key. Flooding, robbery, and fire are common emergencies for renters and homeowners. Protecting your prized positions is very important as the cost of replacing these items can be quite high.
Renter’s (or tenant’s) insurance is a great option that is usually low in cost. When making your selection be sure to review the coverage amount limits for the major categories such as jewelry to see if it will truly be enough based on the appraisal of your items. It’s essential that you have renter’s insurance if you’re a renter because the landlord’s insurance policy will not cover any of your belongings.
Home insurance is a bit more robust as it covers the entire house, it’s contents and incidents that involve your property such as if someone slips on ice on your driveway and is injured. Your policy is assessed by many factors such as your personal credit history, the age, and construction of the house and if you have animals on the premise so be sure to keep these in mind during your search.
When on the hunt for home insurance policies, comparing online is a great way to get the best quotes side by side instantly.
5) Pet Insurance
Do you remember that time Bruno ate your shoe and you had to take him to the emergency veterinarian clinic and the first-ever doggie stomach pump surgery was performed? While Bruno was creating history, your once ample wallet became history too.
Being a pet owner certainly brings a lot of joy but it is coupled with major expenses and sometimes these can come about unexpectedly. The options for pet insurance has grown in popularity over the past few years as and it’s easy to see why. According to caninejournal.com, a pet owner is handed a vet bill of more than $1,000 every 6 seconds. On your search for the proper pet insurance assess if it will include prescription coverage, if routine wellness is covered and what are the waiting periods for the policy to come into effect.
Pet insurance is highly controversial as many criticize it for not actually covering most expenses and overall being unnecessary. A better option may be to build a pet emergency fund in case you experience something similar to these pet horror stories where owner’s were stuck with bills in the thousands.
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In addition to protecting yourself, learning the ins and outs of different types of insurances now will help you build a strong financial foundation that offers peace of mind. With anything, be sure to read the fine print and do your due diligence in finding the best types of these insurances for your unique needs.
Ready to build your insurance portfolio? Read the millennial’s guide to finding and purchasing insurance online.
What types of insurance do you currently own? What tips have helped you when purchasing insurance? What insurance do you see as unnecessary?
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