Insurance Needs Assessment: When You’re Young and Single

| July 11, 2016

By Gregory Bright | Valdosta Today Financial Contributor

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Insurance Needs Assessment: When You’re Young and Single

The transition to adulthood is an exciting new stage that marks true independence. You may have graduated college, taken your first job, and even rented your first apartment. With this new freedom come real responsibilities, including protecting yourself from the financial risks life presents.

Auto
Once you are no longer covered on your parent(s) policy, you will need to find insurance coverage in your name. It can be expensive for a young driver, so consider shopping around for the best rates and learn the myriad of ways to reduce this cost, such as coverage and deductible elections, the type of car you own, and available discounts.

Renter’s
If you are moving into an apartment, you should consider renter’s insurance. You may not think you’ve accumulated much in value, but when you calculate the cost of replacing your computer, electronic equipment, HDTV, clothes, etc., it can run into thousands of dollars. Renter’s insurance can be inexpensive. When shopping for a policy, ask about whether it includes liability coverage, which can protect you in the event you are sued by someone who is injured in your apartment.

Health
Federal law requires that all individuals (with limited exceptions) have health insurance. Failure to obtain coverage can result in a financial penalty. Healthcare coverage is frequently obtained through your employer. However, if your employer does not offer a health insurance program, you have two choices for obtaining coverage.

The first is to maintain coverage through your parent’s health insurance plan. Federal law permits parents to keep adult children on their plan up to age 26. This choice may be relatively inexpensive, so you may want to ask your parents to inquire what the monthly premium is to add you to their plan.

The second option is to purchase a policy directly, either through a private insurer, the federal health insurance exchange (HealthCare.gov), or through a state exchange, if available in your state of residence.

Disability
Your single most valuable asset is your future earning power. Your ability to work and earn an income is essential when it comes to your financial survival. Incurring a disability, even for a short period of time, can have substantial economic consequences; making disability insurance one of the most important insurance needs at this stage of life.

Life
Since a young, single adult typically does not have other people depending upon his or her ability to earn a living (e.g., children, dependent parents), some believe the need for life insurance is minimal.

However, due to a long life expectancy at this young age, life insurance coverage can be very inexpensive. You may want to consider obtaining some coverage to take advantage of low rates and good health in advance of a time when you will have dependents.

Extended Care
Given limited financial resources, extended care insurance may be a low priority. Nevertheless, you may want to have a conversation with your parents about how extended-care insurance may protect their financial security in retirement.

Greg is one of the three advisors with the Bush Wealth team and he leads our investment selection committee. Greg is responsible for providing comprehensive strategies during the planning process. His primary expertise is helping clients set and puruse goals before and after they retire. Greg lives in Valdosta with his wife Amanda and their son Greyson. You can submit questions about this article to gregory.bright@lpl.com.

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Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. The opinion voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Bush Wealth Management and LPL Financial are separate entities.

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