Throughout the course of your lifetime, you’ll experience different insurance needs based on your current and future needs. There are certain types of insurance policies that carry more weight at a specific age than others.
With that being said, we are often faced with the following questions when thinking about insurance – what kind of insurance do I need and when should I purchase it?
Keep in mind that no two people have the same insurance needs.
Here’s a breakdown of the main types of insurance you will encounter throughout your life.
Auto Insurance
Auto insurance becomes important from the moment you first get your driver’s license, around age 16. Most parents add their children to a family policy and will keep them there until they move out or get their first real job.
Insurance companies offer a variety of auto insurance policies that range from covering the basic necessities to covering everything under the sun.
A Comprehensive Policy is a basic policy that is fairly inexpensive and recommended for most vehicles. On the other hand, a Collision Policy is more expensive and suited for higher priced vehicles.
If you live in an area that frequently has hailstorms or other severe weather conditions, consider taking out a policy that covers damages caused by the weather.
Health Insurance
Regardless of your age or current stage of your life, health insurance is an important type of insurance to have. During your teen years, coverage is usually provided to you through one of your parents’ insurance policies.
Your 20’s may be the first time you need to consider health insurance from a personal point-of-view. If coverage is not provided through an employer, consider purchasing an individual policy that has a substantial deductible (i.e., $2,500 – $3,000) to help establish a low premium.
As we progress through our lives, our insurance needs may change due to marriage, having children come and go, or changing health needs. All of these circumstances warrant you to re-evaluate your current insurance policy. If, and when, your children leave home, it is advisable to educate them on the importance of insurance.
At the age of 65 and older, people who have worked and paid into the system can start benefiting from the federal government program, Medicare. It’s wise to review your individual health insurance policy before switching over to Medicare.
Homeowners/Renters Insurance
Regardless if you are renting an apartment, leasing a condo, or purchasing a home, you should always have insurance that not only covers damages, but also liability.
Insurance policies will also vary based on living arrangements and home value. For example, if you have a roommate, each of you should split the cost of insurance.
Life Insurance
Purchasing a life insurance policy when you are young and healthy is an effective way to secure an affordable premium for years to come. Term Life Insurance is ideal at this stage in your life. We also recommend a policy that can, eventually, be converted into a whole life policy.
Life insurance coverage depends on if you need to provide for a spouse or significant other and children. A policy could also be used to pay off student loan debt, credit cards or a mortgage.
Insurance experts recommend getting a policy five to seven times your salary before taxes. Policies should be reviewed and updated whenever significant events happen in your life – such as marriage, having children, divorce and purchasing a home.
As we age, life insurance polices can be used to structure an effective estate plan and even provide funds to pay estate taxes and other expenses. Unfortunately, if you are in your 50’s and haven’t purchased a policy yet, be prepared to spend significantly more money on a policy, as life insurance is determined by life expectancy.
