I know what you’re thinking. Insurance, the most boring thing ever (besides retirement). Who cares?
You should. Do you care about your family? (Silly question, right?) If you answered, “Yes,” then you should care about life insurance.
Do you have treasured possessions in your apartment or house? Then you need homeowners or renters insurance.
Do you have a track record of poor health? Then having health insurance is a must (even though it might seem cheaper to pay a penalty).
These seem like trivial examples, but they’re true. You should insure the things you care about – think of it as an extra buffer to your emergency fund. Should something incredibly crazy happen to you, your home, or your health, you’re covered. Isn’t the peace of mind worth it?
With that in mind, here are 4 must-have insurance policies for millennials. Are you missing any?
1) Renters/Homeowners Insurance
When I signed the lease to my first “actual” apartment (that wasn’t a basement), I was required to get renters insurance. The complex required proof – there was no way around it.
I wasn’t a huge fan of shelling out more money per month than I already was considering I don’t have a ton of valuables, but there are other benefits to having renters insurance.
For example, if something goes wrong in your apartment that causes damage to another apartment (or a guest), you might be on the hook for it. Your insurance policy could cover all or part of the cost.
Also, if you’re not in a traditional apartment complex and think your landlord will cover costs should anything go wrong, think again. They’re not responsible for items of yours that get damaged. Their insurance policy will likely only cover the actual structure of your apartment.
Plus, renters insurance isn’t that much money. Most of the time, you can get a policy for less than $20 per month. Check with the insurance agency you use for your car to see if you can get a discount there.
As for homeowners insurance, that’s pretty much a no-brainer. If you have a mortgage on your home, you’re likely required to have insurance. The bigger question is: how much do you need?
It’s always a good idea to review your coverage. Do you have too much for your situation, or too little? You don’t want to overpay for insurance you don’t need. Consider what you can afford as far as a deductible, and take inventory of your belongings and valuables. How much are they worth?
Additionally, you may need to cover yourself with separate policies, such as flood insurance, if there’s a need for it. Homeowners insurance typically doesn’t cover damages incurred from natural disasters.
2) Health Insurance
DC has written about millennials purchasing catastrophic health insurance and how it may not be worth it, but we’ll take a look at other common health insurance situations millennials may face.
Are you covered under your employer’s health insurance plan? If that’s the case, take a good look at the options available. My fiance had two options, and one is much more expensive than the other. The cheaper plan happened to fit with his needs, but you shouldn’t blindly choose one or the other based on perceived value.
Also, if you’re not familiar with all the health insurance terms, take a second to educate yourself. The process of choosing a plan will seem less intimidating.
If you’re not covered under your employer, what’s your health situation like? Choosing a plan on the marketplace (or directly from a provider) can be tough.
I’ll use myself as an example. I’m covered by my parent’s insurance right now, but next year, I won’t be. I have a history of health issues, and I’m sure I’ll be in and out of the doctors office more than 5 times per year.
As a result, a high copay is something I’m concerned with. If you don’t have a lengthy medical history or need regular prescriptions, then you may not be as worried about this.
However, make sure you save extra funds just in case you need to make a trip to the doctor or ER and have to cover a portion of it. Seriously – I had a look at one of the bills from my surgeries, and was astounded that it was around $60,000. Hospital stays are no joke, which is why you should have insurance.
3) Life Insurance
This is where most millennials make a mistake. Just like retirement, we tend to think life insurance is for those who are older and perhaps more established in their careers.
And just as we’re wrong about the issue of retirement, we’re wrong about life insurance. If you’re a millennial who has a family – a spouse, or a child – or someone has cosigned a loan for you, life insurance can come in handy.
How? If you cease to exist (not fun to think about, I know), how is your family going to recover? If you work, your income is extremely valuable to them. The loss of that income can cripple their ability to afford food, childcare, or the mortgage.
If you don’t work because you stay at home to watch your child, you’re still providing value to your family. Again, if you cease to exist, your spouse is going to have to find an alternative childcare solution in the midst of grieving.
Lastly, if you have private student loans that were cosigned by someone else, it’s not guaranteed that those loans will be forgiven. Many private lenders will transfer the burden of the debt to the person that cosigned the loan. Can that person handle the sudden onset of those payments?
Life insurance is extremely valuable to your loved ones and can help out in an extremely difficult and emotionally challenging time. Consider getting online life insurance quotes from Policy Genius to see how much it would cost you.
4) Car Insurance
Most states require drivers to have, at minimum, liability insurance. This covers the cost of damages to others in the event you’re at fault in an accident. If you don’t have liability insurance, you need to show proof you have the financial means to cover these costs.
Even so, have you ever dissected your policy to see what you’re paying for? You should, as you may be able to lower your monthly premium.
For example, I was able to shave $30 off my premium because I saw that medical coverage was included. I’m already covered by a good policy, so I opted out of it. (That may not be the case for you.)
Additionally, you should ask an agent if you’re eligible for any discounts. You can also ask them how your premium would be affected if you only had the minimum coverage required by the state. This is another tactic I used as my car is on the older side (2002) and not worth having full coverage on.
Choose Insurance Coverage Wisely
We covered this with homeowners and car insurance, but you shouldn’t pay for more than you need. If you have a healthy emergency fund and want to self-insure some expenses, that’s fine, but make sure you lower your insurance coverage. You shouldn’t have to pay and arm and a leg for insurance.
Of course, it also pays to shop around on a yearly basis. At the end of each year, take inventory of your policies and see if your needs have changed. Adjust your coverage accordingly.
Whether we find it riveting or boring, insurance is a must for millennials. No one likes to think about the worst happening to them, but the worst can certainly happen, and when we least expect it. Having insurance can give us peace of mind. These events are stressful enough on their own, we don’t need to add financial uncertainty into the mix!
Do you have all or some of these insurance policies? If you’re missing one, why haven’t you signed up for it? Do you prefer to self-insure? Do you have any tips on shopping for insurance?