Insurance - Auto, Disability, Health, Home, Life and more
For some reason Insurance gets cast as a topic that is only important to older people. This is far from the truth. Not only will we show you why this is a myth, but we’ll ensure that you are prepared to make the necessary decisions regarding your Auto, Disability, Health, Home, Life and any other insurance that is relevant to twenty somethings.
What is Insurance and why do I need it?
Insurance is any means of guaranteeing against loss or harm. Most often insurance is in the form of a contract between two parties in which one party guarantees to cover certain losses should an event happen in exchange for a premium from the other party. Using auto-insurance as an example, your insurer agrees to fix any damages to your car should you get in a wreck and in exchange for this protection you pay the insurer a small fee each year.
Insurance is about displacing risk that is too great for one to assume individually. If your house burned down tomorrow and you lost everything you own, how could you ever replace the hundreds of thousands of dollars that went up in smoke? You couldn’t and that makes owning a house very risky.
When you displace that risk with a large group of others, you are pooling your risk with your neighbors. You are no longer singly responsible for your home and your neighbor singly responsible for their home, but you are all responsible for every one’s homes. If some one’s house in the neighborhood burns down than everyone contributes to getting that family back on their feet.
Pooling your risK with your neighbors forces a constant cost on everyone (not just the unlucky family who loses their home), but this cost is predictable and can be budgeted for. For a small price you are able to eliminate the risk that such a tragic event could significantly impact your life.
What types of Insurance are there and what policies should I have?
As I previously mentioned, Insurance is any means of guaranteeing against loss or harm. There are literally thousands of different types of insurance that companies and individuals can purchase to protect themselves against loss or harm. As long as you can find someone willing to take the other side of a contract, you can insure practically anything.
Let’s focus on the six types of insurance that are most relevant for a twenty something to include in their financial portfolio - Auto, Disability, Health, Home, Renters and Life.
Auto Insurance - Auto Insurance Basics Explained
Disability Insurance - Should I have Long Term Disability Insurance?
Home Insurance -
Renters Insurance -
Life Insurance - Should I have a Life Insurance Policy
