Happy National Life Insurance Awareness Month! Hopefully I didn’t just lose everyone reading this. I know insurance of any sort is a hard topic when you're young and don't have a ton of money. However, insurance is even more important when you don't have a lot of extra cash. Trying to learn about all the types of insurance you may need and figuring out how much to get can sometimes be overwhelming. Take it one step at a time and start learning about your personal needs to see what will work best for you.
Types of Insurance:
Compulsory insurance (has a minimum requirement)
- Minimum requirement set by the Affordable Care Act.
- Various levels of health insurance to pick between.
- While you may think being young and healthy means you need very little health insurance, there are many things out of your control that could cost you a lot should they happen.
Figure out what you want your out of pocket maximum to be to see how much insurance you feel comfortable paying for.
- In a future post I will get more into how to pick what type is best for you.
- State by state minimum requirements.
- The minimums are often not enough coverage, so do your research to see how much you need.
- The more coverage you have, the less likely it is a plaintiff will go after your other assets.
- Generally, the more assets you have, the more car insurance you want.
Home owner's insurance
- Insurance companies will often not fully cover the cost of damage to a house unless you have at least 80% of your home's value in coverage.
Other types of insurance to consider:
- Do you have someone else depending on your income?
- Life insurance is less expensive when you are young and healthy.
- If you wait and apply for life insurance later in life, you could be denied for many reasons.
Partially replaces your salary if you can’t work (this insurance is important for most of your working years for everything from accidents to long term illness).
- Could you cover your expenses if you couldn't work for a while?
- Covers your personal belongings from possible events listed in the policy
- If there was a fire at your apartment could you afford to replace what was lost by yourself?
- Good idea for more expensive trips.
- Some credit cards offer forms of complimentary travel insurance.
- If a hurricane or illness ruins your vacation plans, would you be out a couple of thousand dollars?
An inexpensive way to get started outside of the insurance you buy yourself:
Insurance provided through an employer, either employer paid or employer offered.
- Fees through group plans can be cheaper, but this insurance is often not portable if you change jobs so be aware.
- Also, small amounts of insurance can sometimes be included with credit cards at no cost such as the travel insurance mentioned above.
- If affordable, pays to get some insurance while younger as rates are cheaper and your health is still good.
It's impossible to insure for every event in life
Insure your biggest risks first that would be most catastrophic to you. Regardless of what type and how much insurance you get, always make sure you know what is covered and what type of restrictions there are. Lastly, each year or if any big events happen (like having a baby or one partner deciding to start their own business) re-evaluate your insurance needs. As you grow and life changes, your insurance needs will change as well. Oxford Planning reviews insurance as part of your overall financial planning. Call us with questions – we’re here to help.