Haris Ashley
Young people have a variety of insurance options available to them, and it can be a confusing process to navigate. While health insurance is not mandatory for young adults, it is highly recommended. Young people can choose to stay on their parents' insurance plans until they turn 26, join their employer's health plan, or purchase an individual plan. Other types of insurance that young people may want to consider include renter's insurance, disability insurance, and term life insurance.
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Health insurance
If you are under 26, you may be able to stay on your parent's health insurance plan. This is often the cheapest way to get coverage. The Affordable Care Act (ACA) has notably improved health insurance accessibility for young adults, allowing them to remain on their parents' insurance plans until they turn 26. This extension provides health security during a transitional phase of life when many are starting careers or studies and may not have access to their own insurance.
If you are over 26, or if you would prefer to have your own insurance plan, there are several options for obtaining health insurance. One of the easiest ways is to join your employer's health plan, if they offer one. A great benefit of this option is that your employer will often split the premiums with you, and they will choose the plan, so you just need to sign up. If you are a student, you may be able to enrol in your school's health plan, although this will expire when you are no longer a student.
You can also purchase an individual health insurance plan. These are tailored to one person but can often extend to cover their family as well. To find and purchase one of these plans, you can browse through the Health Insurance Marketplace or contact insurance providers directly. It is important to compare the basic costs and coverage options of each plan to find one that fits your healthcare needs and budget.
Some of the best health insurance providers for young adults, according to Forbes Advisor's analysis, are Kaiser Permanente, Blue Cross Blue Shield, and UnitedHealthcare.
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Term life insurance
Young people may consider getting term life insurance, which offers coverage for a fixed period, typically ranging from 10 to 30 years. The advantage of getting insured early is that it allows permanent life insurance policies to build cash value over time. Term life insurance typically has lower premiums, and young adults who are healthier and have a lower risk of medical conditions are more likely to secure lower premiums. The average person can expect to pay between $300 to $400 a year for life insurance.
The main advantage of term life insurance is its affordability, especially for young people. By locking in lower premiums at a younger age, policyholders can benefit from inexpensive rates for the duration of their coverage. Additionally, term life insurance provides flexibility, as policyholders can choose the coverage amount and type of policy that best suits their financial situation.
While term life insurance offers cost savings, it is important to consider the potential limitations. Firstly, term life insurance does not provide permanent coverage, and renewing the policy at an older age can be significantly more expensive and may involve additional medical examinations. Secondly, term life insurance may not offer the same living benefits as permanent life insurance, which has a cash value component that can be borrowed against or used for other financial purposes.
When considering term life insurance, it is essential to evaluate one's financial situation, future goals, and the level of protection needed. While term life insurance may be a suitable option for some young people, it is not the only type of insurance they should consider. Other forms of insurance, such as health insurance, disability insurance, and homeowners or renters insurance, may also be essential to protect young individuals and their loved ones financially.
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Home insurance
Young people who are renting a home may want to consider renters insurance. This type of insurance is generally low cost, with most people paying between $15 and $20 a month. It covers the replacement of personal property and provides a temporary living situation if the rented home becomes uninhabitable.
If a young person owns a home, they may want to consider homeowners insurance. This type of insurance is typically more expensive than renters insurance and may not be necessary if the homeowner has a mortgage, as the lender will likely require them to carry a homeowners insurance policy. Homeowners insurance provides financial protection from unexpected losses due to physical perils like fire and wind damage, as well as potential liability concerns such as dog bites or slip-and-fall accidents. It is important to note that homeowners insurance is not required in most states or by the federal government.
When considering home insurance, it is essential to assess your individual needs and financial situation. If you have valuable possessions, you may want to consider additional coverage, such as a collections policy, to protect against theft or damage. Additionally, if you live in an area prone to natural disasters like flooding or earthquakes, you may need extra coverage for these events.
It is worth noting that young people can often remain on their parent's insurance plans until the age of 26, depending on their situation and the specifics of the insurance provider. This can provide a safety net while they navigate their insurance options and find the coverage that best suits their needs.
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Disability insurance
There are two main types of disability insurance: short-term and long-term. Short-term disability insurance typically covers a period of a few months to a year, while long-term disability insurance can provide coverage for several years or even until retirement. The cost of disability insurance varies depending on factors such as age, health history, and income. Younger applicants tend to pay lower premiums, and the cost of coverage is typically around 2% of the individual's income.
Most traditionally employed individuals can secure disability insurance through their employer. However, self-employed individuals and business owners may need to purchase an individual policy. When considering disability insurance, it is important to work with a financial professional who can tailor the policy to your specific needs and provide in-depth information about your options.
When choosing a disability insurance policy, it is important to understand the definition of "disability" used by the insurer. Some policies use an "any occupation" definition, which means that the individual is considered disabled if they are unable to perform any occupation for which they are suited by education, training, or experience. On the other hand, an "own occupation" definition protects the specific occupation the individual has achieved. Understanding the distinction between these definitions is critical, especially for highly paid professionals, as it can significantly impact the benefits they receive.
Overall, disability insurance is an important consideration for young people, especially those who rely on their income to support themselves or their families. It can provide financial security and peace of mind in the event of an illness or injury that leaves them unable to work. By purchasing disability insurance at a young age, individuals can protect their earning potential and ensure their financial well-being in the long term.
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Pet insurance
As a young person, you may want to consider getting pet insurance if you have a furry friend. While it may not be considered a must-have, pet insurance can be beneficial in many situations. It can help pet owners avoid the difficult decision of choosing between what they can afford and the necessary treatment for their pet.
The cost of your monthly premium is based on several factors, including your pet's age, breed, and location. Some plans even cover routine vet visits, vaccinations, and preventative care, while others are designed for unexpected veterinary care. It is important to research and compare your options to find the right plan for your pet.
Healthy Paws, for example, offers a highly-rated pet insurance plan with no maximum limits on payout per claim, year, or lifetime of the policy. Their plan covers accidents, illnesses, cancer, emergency care, genetic and hereditary conditions, breed-specific conditions, and alternative care.
Enrolling your pet in a comprehensive insurance policy while they are young is a great way to ensure a happy and healthy future for them and give you peace of mind.
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Frequently asked questions
Young people can get health insurance by joining their parents' plan (if they are under 26), enrolling in their employer's health plan, or enrolling in their school's plan (if they are a student). They can also purchase an individual health insurance plan through the Health Insurance Marketplace or by contacting insurance providers directly.
It is important to compare the basic costs and coverage options of each plan to find one that fits your healthcare needs and budget. Plans with more flexibility and fewer restrictions usually cost more. Young people might want to consider a \"Catastrophic\" health plan, which protects them from worst-case scenarios.
Young people may also need disability insurance, which provides income if they become disabled and unable to work. If they are homeowners, they will also need homeowners insurance, which covers the structure of the home, belongings, and liability.
According to Forbes Advisor's analysis, Kaiser Permanente, Blue Cross Blue Shield, and UnitedHealthcare are recommended health insurance options for young adults.
It is important to remember that insurance is largely personal and will depend on your financial situation and life stage. As your life changes (for example, if you get a new job or have a baby), your insurance coverage may also need to change.
