Here Are The 4 Kinds Of Insurance You Should Have In Your 20s

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On a scale of one to 10, how important is insurance to you right now? If your answer is -20, hear us out. You may feel invincible now, but anything can happen at any time. And as an adult, you have a legit responsibility to yourself, your stuff and your loved ones to take care. It’s time to ride the insurance train, friends! Here are the four kinds you definitely need to lock down in your 20s.

1. Renters Or Homeowners Insurance

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Whether you rent or own, you need to protect your stuff. If you rent, you have your own actions to worry about as well as those of potential roommates. Plus, there’s the condition of your building to think about, among a slew of other factors. You may have a lock on your door, but your entire life is still packed into 500 square feet (or hopefully more) that are definitely destructible. Renters insurance is a must-have, and thankfully, most insurances are cheap AF (as low as just $5 per month) and cover most — not all — potential damages and losses. Homeowners shouldn’t think twice about insuring their stuff, either, for obvious reasons. Homeowners insurance is a slightly more money, but is still budget-friendly, starting as low as $150 per year.

2. Health Insurance

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If you’re under the age of 26, you’re likely still covered by your parents’ health insurance plan, but time runs out quickly and you want to be prepared for when you have to cover yourself. There are a lot of factors that can help you choose the right insurance plan, like whether you have a chronic condition or other health problem, and what kind of monthly prescriptions you have.

“Understand that it’s not just checking boxes, but really looking into it,” Ariel Anderson Fortunato, a certified financial planner at Society of Grownups, told Swirled. “It’s a huge piece of your life, and if you didn’t have insurance and got sick, you’d be paying a lot more.”

During open enrollment, one of the few times during the year that your employer allows you to join or reassess their health insurance options, ask questions and do what you can to fully understand your options. If you don’t have health insurance through an employer and need to purchase it on your own, you can also do that via the Health Insurance Marketplace.

Whatever your circumstance, it’s wise to be covered so that you don’t overpay for something as trivial as a minor sinus infection antibiotic.

3. Disability Insurance

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When we mention the word “disability,” you probably imagine a 68-year-old man named Hank who can’t unload boxes from a truck anymore because he slipped a disc. Well, finding yourself unable to do your job because of an accident or sudden health problem can happen to 20-somethings, too.

“Your income is your largest asset, so disability protects you from the event that you become mentally and physically unable to work and gives you a percentage of your salary, enough to just save some bills,” Fortunato said. “It’s one of those things that you’d rather have but not need rather than need and not have.”

In the event that you’d need disability insurance, your company most likely provides it, though you should check into how much you’d get each month if the worst-case scenario occurred. Some companies might not pay you enough to live, so it’s important to ask those questions now in case you’ll want to get independent disability insurance, which can pay you more depending on the insurance company you choose.

4. Life Insurance

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Even if you aren’t directly responsible for any lives besides maybe your pet, life insurance is important. Whether you have serious loans that could fall on your loved ones, a spouse or if you just don’t want to burden your family with paying for your funeral (we know, it’s gruesome, but it’s the truth), life insurance is a necessity.

There are two types of life insurance: term and whole life.

“With term, you can get it through your employer for cheap,” Fortunato said. “Term is good for income replacement and is good for decades at a time, like 20 to 30 years.” Fortunato recommends term insurance to most millennials because, again, it’s most likely cheap and straightforward. Many companies offer their employees term life insurance that costs as little as $1 per paycheck, yet gives you one-times your salary in coverage.

On the other hand, whole life insurance is like term insurance, but it’s more expensive and covers more specialized conditions like family inheritances or business interests. Depending on your situation, this may be the right move for you and your finances.

Overall, life insurance is important at every age.

“If you have or develop prominent health issues or there are issues in your family, like cancer, getting life insurance can be more difficult,” Fortunato said. Get life insurance while you’re able because anything can happen at any time, and it’s best to be prepared.

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