Wednesday, 24 June 2020

5 Insurance Policies To Get In Your 20s

Insurance Policies

Insurance is extremely important to understand and to talk about it because you can get yourself in a better financial situation, you can finally create some stability for yourself, but if you are not insured properly, you can lose everything that you worked for. So it is really important to make sure you have the right insurance policies and that you understand them. Of course, none of us like to think about death, illness, disaster, or accidents, but they happen all the time. And nobody is immune to it, it can happen to you even though we do not like to think about it, it can happen, so we need to be prepared. Obviously, there are a lot of insurance policies that are required by law depending on where you live, and there are also policies that are just optional, but a lot of them make good financial sense, so in this article, I want to share with you six insurance policies that you should make sure that you have in your 20s and beyond.

But before I get into the list I want to define two key insurance terms that you need to understand. There are lot more terms used in insurance that are important to understand, but that is just too much information for this article, so I am just going to define the two major terms that you need to understand.


Premium

Premium is the amount that you pay every single month to keep your insurance policy active, to keep it in place. Now, the higher your premium, the more you pay every single month, the more insurance you will have, the more coverage or the better insurance you will have. And the smaller your monthly premium, the smaller amount of insurance you have. If you pay more every single month you are going to get more coverage, if you pay less every single month you are going to get less coverage. Depending on your life situation you may choose to go for a higher premium or a smaller one that is a very individualized decision so I am not recommending one or the other, I just want you to understand what a premium is.


Deductible

A deductible is the amount of money you pay out of your pocket before the insurance will start paying. Most insurance policies have a deductible. You are going to pay your monthly premiums to keep the plan in place and then if something happens you are going to have to pay something out-of-pocket to meet your deductible, say you have a $500 deductible that means you need to pay your monthly premiums every single month and pay $500 towards that medical cost or towards that expense before the insurance will pay.


That's enough background information let's get into the list.



1. Health Insurance

I know this sounds very obvious and in a lot of countries, health insurance is mandated. But it is always important to have health insurance. If you are in the United States you can stay on your parent's health insurance policy until you are 26 years old, but after that, you are going to be on your own. A lot of people get health insurance through their employer, through their job it is part of the benefits package that they get through their job, but if you do not have a job that offers health insurance you are going to be on your own to get a plan. The monthly premiums on health insurance can be very offensive but it is important that you do not skip out on this, do not think, hey, I can save some money because I am healthy and I do not want to pay $400 $500 $600 however much dollars per month towards health insurance because I am healthy and I am never going to use it and I rather save that money. that is not a good idea, you always need to be covered. Medical expenses can add up insanely fast, they can put you into debt and you can lose everything, so you need to be insured. Health insurance is expensive, but not having it, is way more expensive.


2. Renters Insurance

If you rent an apartment or if you rent somewhere to live, you need renter's insurance. This is cheap insurance usually you can pay around $10 to $30 a month to get yourself covered. Renters' insurance policies have a deductible. You have to pay your premium and then you will have a deductible, say you have a $1,000 deductible on your renter's insurance policy that means you are going to need to pay your premiums every month and $1,000 out-of-pocket until the renter's insurance will kick in. Say your apartment gets robbed and you lose absolutely everything, you are going to have to pay the first $1,000 to replace your belongings and the renter's insurance will cover the rest or more depending on your policy. But the cool thing about renters insurance is that it does not just cover the stuff in your rented apartment, it can cover a lot of other things as well.

It is really important that you look into your policy and understand what is actually covered, I know when I lived in New York my bicycles got stolen from a public bike stand, they were not parked anywhere near where I lived and my renter's insurance policy covered the cost to replace those bicycles. A lot of the times these plans also cover things like if something is stolen from your car or if a laptop gets stolen on a table in a coffee shop or things like that. They can cover a lot of things at a very small cost every single month. So definitely get yourself a renter's insurance policy if you do not have one, it is a small expense that can give you peace of mind 


3. Life Insurance

A lot of people don't have this in their 20s because nobody relies on them financially, but if you do have anybody that relies on you financially you need a life insurance policy. If you are married or if you have children you definitely need life insurance. Let me briefly explain how life insurance works. I have a life insurance policy on myself and my wife is listed as the beneficiary, what that means is if I die, my wife will get a fixed amount of money that is set in the policy. This could help her cover funeral expenses and get her life back together after I would die.

The amount you pay every month varies greatly, and it depends on a lot of factors, the main factor is how much money you want the policy to pay out to your beneficiary in the case of death. But it also considers your age, are you a smoker, your personal health and all of that. Most life insurance policies will require medical tests and blood tests before they determine if you qualify for the policy. There are life insurance policies that do not require a medical test, but then you are going to be paying more every single month.


4. Disability Insurance

If you rely on a steady paycheck to survive and to support yourself, you need disability insurance. With disability insurance, you can ensure that if you become disabled you can continue to live the same lifestyle that you are living currently. If you have a job, if you are traditionally employed, most likely your employer offers some form of disability insurance, but if you are self-employed you are going to be responsible for getting a policy for yourself.


5. Car Insurance

This only applies to you if you have a vehicle. If you own a car you need car insurance. Of course, this is typically mandated, you are required to have insurance on your vehicle but I think it is important to also understand car insurance a bit and to understand that the purpose of car insurance is not just to repair your car in the event of an accident. Car insurance can also ensure that if you hurt somebody if you injure somebody with your car if you damage somebody else's car and their property, your car insurance can help cover that. Again, it depends on your policy, but that is what it is for. I know when I used to have a car in the US and I had a total junk car that was worth $2,000, my car insurance policy was only to cover other pupils' cars, other people's injuries. The cost to repair my car in the event that it was damaged was not covered.





Conclusion

I know it is not insanely exciting but something was calling to me to write this article and to put this out there because I was looking around on the internet and I could not find anything on insurance for young people and I personally think that it is very important, because like I said many times throughout this article, you can get yourself into a great financial situation, but if you are not properly insured, you can lose everything that you worked for. So insurance is a small price to pay to give yourself that financial security but please keep in mind I am not an expert on insurance, I am not a financial planner or anything like that so these are all just my personal recommendations please speak 

No comments:

Post a comment