Insurance is the part of financial planning that everybody hates, but something that shouldn’t be overlooked. Managing risk is crucial for your financial plan, so today we are jumping into some types of insurance millennials should not glaze over.
1. Health Insurance
Health insurance is a very common insurance most millennials are familiar with, so there’s not much to cover. Although, here are a few key terms to remember:
Copay – The amount you pay when you visit the doctor.
Premium – This is what you pay to remain insured. The higher your premium, the lower your deductible.
Deductible – The amount you will need to spend until your insurance kicks in.
Typically, an employer will cover the health insurance for their employees and what they choose to add in with vision and dental is their choice. If you are self-employed without health insurance, it may be time to talk about adding coverage.
2. Life Insurance
The rule of thumb here is if you are supporting someone, you should have life insurance. Stay tuned later this month for a blog on life insurance.
This is a difficult conversation because the discussion revolves around death, but it should not be avoided. If you have a family, life insurance helps support them after you are gone. There are multiple options for the type of coverage you can get. Permanent life insurance covers you for your entire life and allows you to invest, but these policies can be costly. Term life insurance is less expensive and lasts for a specified period of time. For Millennials, I say the best route to go is save on term and invest the rest.
3. Homeowner Insurance
If you own a home, this is extremely important as your home may be your largest asset. With this insurance you will receive coverage for:
- Stolen or damaged property
- Replacement or repairs on property
Make sure to read what your home insurance covers.
4. Renters Insurance
Landlords will have insurance on their homes/apartments; however, you will want coverage for the things inside your residence. A basic package could include coverage on:
- Contents inside residence
- The loss of use
- Medical and/or bodily injury caused by an accident.
5. Car Insurance
Almost every state requires that you have car insurance, so here are some things to look for in your policy.
Liability Coverage – Mandatory in most states, but this insurance covers the other person in an accident.
Uninsured and underinsured coverage – If you are hit by someone who either doesn’t have coverage or not enough coverage, this will help you pay for your medical bills or repairs to your vehicle.
Comprehensive – This will be an optional coverage, which can be required by a bank if you are leasing or financing that vehicle. Comprehensive may help cover things like theft, fire, hail, and anything that does not happen on the road.
Collision – Another optional coverage that covers your car if you were to get in a wreck.
When looking at car insurance, keep in mind that the more coverage you have the more expensive your plan will get. You will be able to add things such as rental coverage, gap insurance, and towing coverage. When choosing all these add-ons, make sure you’re not over covering, but also not underinsuring.
6. Disability Insurance
As its name suggests, disability insurance is the coverage used to replace loss of income due to disability.
Check your employer’s coverage since this is the cheapest route. However, if you don’t have this option or the coverage is not enough, you will need to get your own policy outside of work.
With your income being the greatest asset as a millennial, it is best to protect it!
7. Pet Insurance
Pets have become such an integral part of our lives, but we all know that owning a pet can become very expensive. Having pet insurance can help cover the costs of vet visits, vaccines, and surgeries. There are 4 types of pet insurance you can look into:
Lifetime – This is the most comprehensive. You pay premiums throughout your pet’s life, and the insurer must keep covering you.
Annual (or time limited) – You pay 12 months on a rolling basis. The benefit of this plan is it allows you to find cheaper options at the end of each 12 months. Overall, this plan will cost less which will offer less coverage.
Accident – As the name implies, this covers accidents, but does not cover illness.
Maximum Benefit – You pay a fixed amount to treat each illness or injury.
You may not need insurance if you plan for these kinds of expenses ahead of time, but you also never know when an accident might happen to your furry friend.
8. Umbrella Insurance
Lastly, I want to include umbrella insurance because this acts as an ‘umbrella’ over claims that exist beyond your current coverage. Umbrella insurance can typically extend to other members of the household. This can be beneficial if your kids are sued, or your spouse causes an accident.
Insurance can be a difficult topic; however, it becomes a lifesaver when those unexpected events occur. You never know what can happen when you start having kids, owning businesses, or accumulating assets.
Five Pine Wealth Management is a registered investment advisor offering advisory services in the State(s) of Idaho and Washington and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.
The information in this blog is for informational purposes only and should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security or advisory service in any jurisdiction where such solicitation, offer, or recommendation would be unlawful or unauthorized.
The information provided should not be relied upon as the sole factor in an investment making decision. Past performance is no guarantee of future results.