Insurance
What Is Insurance?
Insurance is a financial safety net that protects you from large unexpected expenses.
How Insurance Works
You pay regular premiums to stay covered. If something happens (like a car accident), you may also pay a deductible—a set amount out of pocket—before your insurance kicks in. The insurer then pays the rest, up to your policy's limit.
Common Types of Insurance
Health Insurance: Covers doctor visits, surgeries, prescriptions, etc.
Auto Insurance: Covers accidents, theft, and damage to your car or others’ property.
Renters/Homeowners Insurance: Protects your belongings and/or home from fire, theft, or natural disasters.
Life Insurance: Pays money to your family or beneficiaries if you pass away.
Disability Insurance: Replaces part of your income if you can't work due to injury or illness.
Key Terms
Premium: What you pay to keep your coverage (monthly or annually)
Deductible: What you pay before insurance helps with a claim
Copay/Coinsurance: Your share of medical or service costs (common in health insurance)
Claim: A request you make for your insurance to pay for a covered expense
Coverage Limit: The maximum your insurance will pay for a claim or over a period
Why Insurance Matters
Without insurance, a car crash, illness, or house fire could drain your savings or put you into debt. Insurance gives you peace of mind and financial protection when life takes a turn.
Smart Insurance Habits
- Compare policies before buying—cheaper isn't always better
- Understand what's covered (and what's not)
- Choose a deductible you can afford in an emergency
- Take advantage of discounts (e.g., good driver, bundled policies)
- Review your coverage yearly or when your life changes
Mistakes to Avoid
- Skipping insurance to save money
- Not reading the fine print of your policy
- Choosing a deductible that’s too high to afford
- Missing premium payments (could cancel your coverage)
- Assuming your employer or landlord covers everything
Goal for Young Adults
Build a strong foundation by covering your essentials: health, auto (if you drive), and renters or homeowners insurance. As your life grows, so should your protection—insurance is a key part of financial wellness.
