Insurance Basics for Young Adults
What even is insurance?
Insurance is basically a financial safety net. You make regular payments in exchange for protection from unexpected costs. For most of your life, you have probably been covered under your parents’ insurance. As you transition to adulthood, having your own insurance helps you stay independent and navigate unexpected events without putting your finances at risk.
What happens if you don’t have insurance?
Imagine you’re in a car accident and it’s your fault. Both cars are totaled, and someone in the other car needs medical care. You could be responsible for tens of thousands of dollars in damages, and most people don’t have that kind of money lying around. With insurance, those costs could be covered, letting you move forward without risking your savings or future income. Without it, you might face lawsuits, wage garnishments, and financial stress that could wreck your future.
Types of insurance
Insurance isn’t just for cars. It protects you from financial risks in many areas of life, helping you avoid setbacks and maintain your independence. Rumor has it Taylor Swift once had her legs insured for $40 million. We can’t confirm if that’s true, but protecting your own assets works the same way. There are policies for almost everything, but these are the most relevant ones for young adults.
Renters insurance is required by most landlords and tends to be very affordable. It protects your belongings, covers liability if someone is injured, and can help with temporary living costs if your apartment becomes uninhabitable.
Auto insurance is required in most states. It’s highly customizable, with discounts for young drivers and optional add-ons, allowing you to tailor coverage to fit your specific needs and budget.
Health insurance is important even if you’re young and healthy, as the cost of medical care can add up quickly. Many people start on a parent’s plan, but coverage usually ends around age 26 and may end sooner for those on Medicaid.
Home insurance covers your house, other structures, and belongings while protecting you if someone is injured on your property. It can help with temporary living costs, and policies are customizable with optional coverages.
Essential insurance terms
Insurance doesn’t have to be confusing. Here are some common insurance terms you’ll see:
Policy: The document that outlines what your insurance covers, what is excluded, and how your coverage works.
Premium: The regular payment you make to keep your coverage active, like a subscription for financial protection.
Claim: A request you submit to your insurance company asking them to pay for a covered loss, service, or expense.
Deductible: The amount you must pay out of pocket on a covered claim before your insurance begins to pay.
Limits: The maximum your insurance will pay for a specific claim or category of coverage.
How much does insurance cost?
Insurance costs vary depending on the type of coverage, what’s being insured, and other factors like your age, lifestyle, and location. Choosing the right coverage level, being responsible, and using available discounts can help keep premiums manageable. Bundling multiple policies, like auto and renters insurance, can also lower your overall cost. The goal isn’t just to find the cheapest option. It’s to have insurance that actually works when you need it. Common mistakes include skipping coverage to save money, underinsuring belongings, or not fully understanding deductibles and other terms.
How do you get insurance?
The first step is talking to an insurance agent, who can guide you through your options, explain confusing terms, and help you find coverage that works for you. Consider your day-to-day life, your possessions, and situations where you could be financially vulnerable, then choose policies that match. You can also use online tools to get quotes, which are usually free. You’ll need some basic information, like your age, address, what you want to insure, and any relevant history such as driving records or past claims. When reviewing policies, check coverage limits, deductibles, exclusions, and optional add-ons so you know exactly what you’re getting. Taking the time to get guidance and compare options makes it easier to protect yourself without overpaying or ending up with gaps in coverage.
Insurance = Adulting
Obtaining your own insurance may feel overwhelming, but it’s a key step in becoming independent and protecting your future. Start small if you need to, focus on the coverage that matters most, and adjust your policies as your life changes. Don’t overthink it; just take the first step. Connect with an Alfa® agent who can guide you through the process and make insurance feel a lot less confusing. One small step for you, one giant leap for your future self.
All coverages are subject to deductibles and policy limits. This is not an insurance policy. It is intended only to provide a general description of Alfa Insurance® and/or its product lines and services. An actual policy contains the specific details of the deductibles, coverages, conditions and exclusions. Your Alfa® agent can explain the policy and benefits and answer any questions you may have before you buy.