Welcome to young adulthood! This is an exciting time, a whirlwind of new responsibilities, changes, independence, life milestones, and finding yourself. There are a million paths you can choose, but wherever life takes you, you need insurance to protect you from bumps in the road. This insurance guide for young adults includes useful information and insurance tips for choosing coverage and saving money. Another important thing to consider when it comes to insurance for young adults is how life milestones impact insurance. We will discuss the life milestones that can impact your insurance to ensure that your insurance coverage is on track through the roller coaster ride of young adulthood.
Building a Strong Foundation: Beginner Insurance Tips
Handling your own insurance might not be the most exciting part of growing up, but it’s extremely important. These insurance tips for young adults will help you navigate the insurance process with confidence and find insurance policies that fit your needs and budget.
- Learn Basic Insurance Terms: Without a basic knowledge of insurance terms, it’s difficult to converse with insurance agents, understand your options, and choose the right insurance policy. Check out this guide to basic insurance terms and conduct your own research to become a well-informed consumer.
- Shop Around & Compare Policies: Don’t settle for the first offer you receive because it seems “good enough”. Request quotes from multiple insurance companies, compare coverage options and rates to find the policy that best fits you and your budget!
- Independent Insurance Agents are Your Advocates: Agents that represent a single company are going to try and convince you their policies are the best, it’s their job. Independent agents on the other hand work for YOU, their job is to evaluate your needs and budget, compare companies, policies, and rates to find the perfect match. Working with an independent agent on the front end can save you a lot of money in the long run.
- Build Your Credit Score: Your credit score impacts your ability to secure housing, get a loan or mortgage, open credit cards, interest rates, and more, but did you know that your credit score impacts insurance? Insurance companies can deny you coverage because of your credit score and people with lower credit scores typically pay higher premiums. So, buckle down and build that credit score!
- Bundle Policies to Save Money: Many insurance companies offer bundles where you combine multiple policies under one plan for a discounted price. The most common bundle is renters/homeowners insurance and car insurance. Ask about bundles to make sure you’re not missing out on a savings opportunity.
Milestones and Life Changes that Impact Insurance
Young adulthood is full of growth, change, and milestones. With so much going on, it’s important to remember that your insurance needs will grow and change along with you. Here are some of the major life events that impact insurance along with useful information and advice for handling them.
Getting Your Own Health Insurance Policy
This section will provide you with important information about getting your own health insurance, options, and factors to consider.
Stick to the family plan: Stay on your parent’s health insurance plan for as long as possible, this is typically the cheapest option for young adults. What age do you get kicked off the family health insurance plan? Under the Affordable Care Act, individuals are allowed to stay on their parents’ health insurance plan until they turn 26.
Happy 26th Birthday! Before you turn 26 and get kicked off the family health insurance, you need to conduct research and enroll in a plan. While there is usually a grace period before coverage cuts off, keep in mind that it may take a while to find the right plan, applications can take weeks to process, and going any amount of time without health insurance coverage is extremely risky.
Employee health Insurance: Many young adults are on the job market. Employer-sponsored health insurance is something to look for when searching for jobs. A job with health insurance benefits will save you money monthly and can help you afford better coverage than you could on your own.
Affordable health insurance is the top priority for most young adults when shopping for their first health insurance policy. If you are in good health, choosing a plan with a low monthly premium can be a wise financial decision. However, it’s important to remember that insurance policies with low premiums have higher deductibles. Your deductible amount should not be high enough that a major accident or illness would destroy you financially.
Moving Out: Renting a Home or Apartment
Moving out and getting your own place is a major milestone for young adults. Whether you rent or own your home, you’ll need a renters insurance or homeowners insurance policy to protect you and your property.
Protecting Yourself as a Renter: Renters Insurance
The landlord or apartment complex owns the place, so their insurance has you covered, right? Wrong! Your apartment complex or landlord’s insurance policy only covers the building, not what’s inside. You need renters insurance to protect you and your things.
How much is renters insurance?
Paying rent for the first time is a big financial adjustment, so spending additional money on renters insurance might seem out of the question. The great news is, as of 2024 the average cost of renters insurance is only $12 per month and it can save you from massive losses if disaster strikes.
What does renters insurance cover?
Renters insurance policies vary and can be customized to meet your needs, but these are some of the common things that renters insurance covers.
- Liability: If someone is injured while visiting your home, renters insurance can help cover legal costs and their medical expenses.
- Personal Belongings: Renters insurance covers the cost of items damaged or destroyed, such as by a fire or flood. If you are a victim of theft, renters insurance reimburses you for stolen items.
- Temporary Relocation Expenses: If you are forced to move out of your rental home temporarily due to fire damage, a leak, etc., renters insurance can help cover the additional living expenses of staying somewhere else.
Buying a House: Insurance for First Time Homeowners
Congrats, you’re a homeowner! Owning a house is a major accomplishment and an investment you need to protect with the right insurance. Being a first-time homeowner can be scary, and we’re not going to sugarcoat it, unforeseen problems, damage, and disasters might happen. But having a solid homeowners insurance policy can give you the peace of mind that if something does happen, everything will be okay.
What does homeowners insurance cover?
Homeowners insurance includes the same types of coverage as renters insurance—liability insurance, personal belongings insurance, and coverage for temporary relocation expenses. Additionally, homeowners insurance includes dwelling coverage. Dwelling coverage pays for repairs or rebuilding if there is damage to the structure of the home, built-in fixtures (cabinets, countertops, etc.) or surrounding structures such as sheds and garages.
Other Ways to Protect Your Home
Even though you have coverage to help you recover, it’s wise to be proactive in preventing disasters before they happen. Smoke detectors, security cameras, trimming branches and cutting down trees that could fall on your home, and other safety measures will mitigate the risk.
Keep Track of Your Belongings
It’s important to note that in order for your personal belongings to be covered under your renters or homeowners insurance plan, you must have documented proof that they exist.
How to keep track of belongings for insurance purposes:
- Visual documentation: Record a video of your apartment or house and take photos of valuable items.
- Keep receipts: Record the value of expensive purchases by keeping receipts.
- Write down the details: Keep a record of serial numbers, brands, model numbers, and purchase dates of valuable items.
- Additional coverage: If you have a particularly expensive item, like a valuable painting or a piece of fine jewelry, you should inquire about additional coverage.
Starting a Family: How Marriage & Children Impact Insurance
It’s not just about you anymore. If you haven’t taken insurance seriously up to this point you need to start doing so now! Insurance changes when you get married and start a family because you’re not just protecting yourself, you’re protecting your spouse and children, and your insurance policies should reflect that.
The Importance of Life Insurance
The purpose of life insurance is to provide financial security for your loved ones in the event of your death. If you don’t have a life insurance policy already, you should consider getting one when you get married. As your family grows, so should your life insurance policy to match your family’s theoretical financial needs. The death benefit (the sum of money paid to your beneficiaries in the event of your death) can help cover expenses such as funeral costs, debts, mortgage payments, children’s education, and replace your income.
Family Health Insurance
Adding your spouse and/or children to your health insurance plan will increase your premium, so make sure to budget for that. In some cases, it’s wise to shop around for new health insurance when you start a family because there are family plans available that come with additional benefits and offer lower premiums per person compared to individual plans.
Liability Insurance
Kids are clumsy, and so are their friends. Consider adding or increasing liability coverage to your homeowners insurance plan to protect yourself in case a playdate ends in injury.
Let an Independent Insurance Agent Guide the Way
Life comes at you fast and your insurance needs to keep up! We know we threw a lot at you in this article, and to be honest, we only scratched the surface. There are additional types of insurance that you may need such as car insurance, long-term care insurance for your parents, business insurance, mortgage life insurance, etc. Plus, every young adult’s insurance needs are different, so while these tips are a good place to start, the wisest course of action is to seek out the help of an independent insurance agent.
An independent insurance agent is your advocate for finding the right coverage, the best prices, and navigating the ever-changing waters of young adulthood. An independent insurance agent will address your exact needs and monitor and alter your insurance policies on an ongoing basis, so your safety net is always sturdy, in the right place, and ready to catch you if you fall.
For nearly 60 years Inter-Agency Insurance Services has helped clients throughout the country with their personal insurance needs. They negotiate with a carefully selected group of insurance companies on your behalf to find you the perfect coverage at a competitive price point. IA is a family-owned business with two young adults of their own. They are dedicated to helping young adults like you prepare for the future by providing expert guidance and excellent personal insurance services.