Everything New College Grads Need To Know About Insurance
Coverage 101: Which policies will you need in “the real world”?
It’s called commencement for a reason, college grads: You’re beginning a new phase of life. In it, you’ll have a few real-world concerns—such as insurance. What kind of coverage do you need? Which types are most important to you now? It helps to be familiar with the majors—the “big four” types of coverage most people will eventually have. Here are the insurance basics.
Of all types of insurance, auto is certainly a priority. Not only does common sense dictate that you need this insurance, but most states require motorists to have it. Here are some tips for finding a policy that gives you the coverage you need without the budget-busting premiums.
Shop around: Get at least three quotes. And remember that the lowest price isn’t always the best price. Reputation and reliability matter a lot.
Increase your deductible: Doing so lowers your premiums. Just be sure you can cover the higher deductible if you have a claim.
Consider insurance costs before you buy a vehicle: The make and model of the car itself partly determines your premiums.
Drive safely: Always, of course. Bonus: A clean driving record means lower premiums.
Like many other freshly minted college graduates, you’ll probably rent an apartment or a house before buying property. Renters insurance, then, is a smart move. Contrary to what many people think, your landlord’s insurance will not cover your possessions in the event of a fire or other disaster. Renters insurance also provides liability coverage for protection from lawsuits.
Another good thing about renters insurance: It’s relatively inexpensive, giving you lots of protection for a relatively modest financial commitment. Plus, if you pay on time and avoid excessive claims, when it’s time to purchase a homeowners policy, your history can help demonstrate that you’re a low-risk customer.
This is vast terrain to explore on your own. But thankfully, most employers hiring college grads for full-time jobs offer health insurance coverage. Take advantage of it, especially if you can also get dental and vision coverage; sometimes, disability and life policies are also available through your employer.
If your employer doesn’t offer health insurance, you can purchase coverage from an individual insurer or a government marketplace (visit healthcare.gov for more information). Remember: Under the federal Affordable Care Act (also called Obamacare), your parents can keep or add you to their plan until you’re 26.
Some experts say you don’t need to buy life insurance unless you’re married or someone else depends on your income (children, for example). Companies do not have to offer their employees life insurance. And even if they do, they could discontinue the benefit.
You may think you don’t need life insurance if you’re young and healthy—but you can get lower premiums since rates are based partly on age as well as health.
It’s important to learn the difference between the two types of life insurance—term and permanent—and decide which is best for you. Term covers you for a specific period of time—say, 20 years. As for permanent, as long as you pay premiums on time, permanent coverage is designed to last your entire life.