Economy & Jobs
The Best Types of Insurance Policies for Millennials
It’s unlikely that you spend much time thinking about the types of insurance you should consider if you’re in your 20s. Auto insurance is a given since many states penalize you if you’re caught driving without it. But chances are your concerns over insurance ended when you set up your health insurance plan with your employer or through healthcare.gov. And for some of you under 26, you may still even be on your parent’s health insurance plan.
You’re all set, right?
Here’s the reality: Protecting yourself and your stuff goes beyond health insurance. Yes, even in your 20s. No one wants to think about the worst that could happen, but life is unpredictable. Protect yourself by considering the types of insurance you need right now.
If you’re employed and receive company benefits, you probably have life insurance (check with your HR manager). Most employers offer a small amount of coverage for their workers. Should anything happen to you, these policies usually pay out just enough to cover funeral costs.
If you’re single, debt-free, and don’t have dependents, a small policy through your job should provide enough financial support. But if you hold financial liabilities (such as consumer debt or a mortgage), have a partner who relies on your income, or support children or other people in your household, you may want to look into a larger policy that will financially protect your surviving family members.
When in your 20s, the most important asset to protect is your ability to work and earn an income. This is why you need to consider some form of disability insurance. Think you’re fine without it? The U.S. Social Security Administration estimates that before the golden retirement age of 67, 25 percent of today’s 20 year-olds will become disabled.
As with life insurance, many employers provide short- and long-term disability as an option, and some coverage may be rolled into your health plan. Ask your HR manager about what’s available to you.
If you rent your place of residence, renter’s insurance is a must. This will protect your property in the event of a fire, flood, or other unforeseen event.
Don’t skip over this protection with the assumption that nothing will happen to your possessions or your apartment. Again, life is unpredictable — and renter’s insurance is inexpensive. Most policies will run between $10 and $30 per month.
And if you own your home? Homeowner’s insurance is typically required to take out a mortgage from a lender. Just make sure your policy and coverage provide adequate protection. Be sure to shop around for the best rates.
Are There Types of Insurance 20-Somethings Don’t Need?
When you’re in your 20s, you need to make sure you’re protected from the unexpected, and everyone’s case is different. But that doesn’t mean you need to be stacked to the gills with insurance policies. Consider passing on the following types of insurance:
- Whole life insurance – This is expensive and not beneficial for most people. Term life insurance is a more affordable option, especially for Millennials.
- Pet insurance – Instead of insuring your pets, create an emergency fund for your furry friend instead.
- Accidental death insurance – Life insurance usually covers accidental death, but make sure you understand the fine print before pursuing any policies.
- Private mortgage insurance – If you want to purchase a home, a good rule of thumb is to put down at least 20 percent of the home’s purchase price. Otherwise, your lender may require PMI whether you like it or not.
Insurance isn’t something most Millennials want to think about, and everyone’s situation will differ. But a serious look at your finances and your current coverage today will help you rest easy, knowing you are protected from the unexpected.