Insurance for Your Twenties
The twenties are fraught with the burdens of college loans, cramped apartments and low-paying jobs that somehow don't faze you because you're blessed with smooth skin, energy and hope.
Twenty-year-olds are so optimistic in fact that nearly 1 in 3 go without health insurance—compared to 1 in 6 Americans overall. Not to mention auto, home, life and LTC. Some types of insurance are indispensable for even the healthiest of twenty-somethings, while others you can safely forego until you reach middle age.
Health
Everyone should possess some type of health insurance. If you aren't covered by your employer's group health plan, you may choose to pay for a high deductible health plan. An HDHP is usually paired with a health savings account.
With an HDHP you'll get lower premiums but much higher deductibles. So your month-to-month medical needs and preventative care are not covered. However, if you become gravely ill or are in an accident, your HDHP will kick in—after you pay a preset amount. But having an HDHP is not ideal because it doesn't cover preventative care, prescriptions or routine trips to the doctor's office.
Auto
Like health insurance, if you drive a car, having auto insurance isn't really an option.
If you're strapped for cash, there are a few things you can do to score lower rates. Obviously, insurers take your driving record into account. But were you aware they also use your credit score to gauge risk?
The lower your score, the higher your premiums. You can receive discounts for adding anti-theft devices to your car, parking in a garage, raising your deductibles and insuring your car with other family members.
Renters
If you rent an apartment or house, you should consider protecting your assets with a renters' policy.
Your landlord's insurance will only cover the structure of the building. A renter's policy protects your possessions against damage or loss.
Want to save on your renters' insurance? Make it a double! Using the same company for renters and car insurance reduces your rates for both.
Life
Chances are you don't need life insurance. It guarantees the economic stability of loved ones in the event of your death. Most young adults are single and childless—leaving little reason for a life insurance policy.
A few exceptions include individuals caring for elderly parents or young siblings and those with massive debt they do not want to pass on to their family members. If you choose to buy life insurance, it is cheaper the younger you are.
Long Term Care
Although you could suffer an injury or debilitating illness at any age, most financial advisors would tell you it is not worth it to buy LTC insurance so young. Adequate health coverage should suffice. And your money is better spent paying off debt. If you're debt-free, speak with an advisor about putting your funds into a 401K or IRA to save for retirement. Once you are slightly older with more disposable income, you may opt to get an LTC policy to lock in low rates.
