Be it the discouragingly high car insurance policy rates for first time drivers, or the non-existent health insurance that seems to only exist with parental reminders – insurance is the nostalgic boogie man hiding under your dorm room bed, and popping out every now and again to make its indispensable presence known to you. What does the proof show?
You aren’t giving it any attention.
After all, young adults between the ages of 18 to 34 have the highest rates of being uninsured compared to any other age group.
So what is it about insurance, and why are so many young people like you inundated with fear, skepticism, indifference, and every feeling in between? Well, honestly, it’s because insurance has long had a complicated and undesirable rep. The public perception has either been of insurance agents ripping people off, causing mountains upon mountains of confusion, or both. But truthfully, there’s a flip side to this credible misrepresentation.
If it isn’t enough to worry about grades, increased responsibilities, and not getting a break for self-care, insurance should be the last thing to cross an overdriven, fleet-prone mind, right? Except that insurance can actually erase most, if not all your college student woes.
Health insurance coverage does wonders for keeping you physically and mentally sound when the demands of school, sports, family, and friends need you the most.
Auto insurance is an additional plus if you desire to come and go as you please, and to cover more ground which means maximizing the probability of meeting all those demands.
Before going on a rampage search to find out all you possibly can about insurance, start with this one-stop shop resource that is guaranteed to answer every question you’ve been shaking in your boogie boots about.
In this article, insurance is made simple all across the board. We’ll cover:
- How insurance works
- Common Insurance coverages explained
- Insurance you need as a college student
- Insurance definitions
- Books and resources
So, there you have it! Let’s get started.
How Insurance Works
Insurance, as you know, is a way to manage risk. Buying insurance simply protects you against unexpected financial losses.
The amount of risk, liability, or potential loss that is protected by insurance is greater when you are someone who has health or lifestyle factors that are deemed riskier for life insurance companies, such as the case with being a new driver.
To be sincere, auto insurance premiums are a first time driver’s worst nightmare. As already stated, the level of risk, liability, and potential loss is high, so the insurance companies assume the worst-case scenario, protecting themselves against offering these new drivers’ the lowest rates just to be hit with high claims.
Moreover, first time drivers have virtually no driving record, and are much more likely to be involved in automobile accidents. The combination of youthful exuberance and lack of driving experience is a recipe for a good bout of shoulda-coulda-wouldas. Insurance companies know this, even more than the new drivers’ parents.
So what comes out being a smart business move on the insurance company’s part is also an advantage to someone, like the first time driver, who knows they may deal with significant automobile costs. Higher monthly premiums often equate to lower deductibles, which means your insurance company will start paying out sooner. It’s a win-win.
Convinced yet in staying securely backed with your auto insurance policy?
You can also be a winner with other realms of insurance coverage.
Common Insurance Coverages Explained
As mentioned above, there are so many ways to get insured, setting yourself up for the ultimate plan in financial loss prevention. Here are the most common insurance coverages that you should know about.
If not the most common, it should be. Life is all about self-preservation. And health insurance companies make it relatively easy to live up to that standard. Health insurance is a contract that requires you, the insurer, to pay some or all of your healthcare costs in exchange for a premium, also known as a certain rate each month. Different plans cover different services, but you can expect to be covered for medical, surgical, prescription drugs, and dental depending on your plan.
If you’re someone who is not insured, you instantly feel the financial weight, and the health implications brought on by hospital and doctor bills, with keeping up with potential health insurance orders, and dealing with the adverse effects from lack of health care to begin with.
Being covered with health insurance alleviates the stress of following insurance mandates, footing medical bills, and having a host of health problems that could’ve been prevented. By having health insurance, you’re taking your life into your own hands in a responsible, and finance-minded way.
Auto insurance, as costly as it can be for those individuals just starting out on the road, is a must for anyone that anticipates experiencing the thrill of putting the pedal to the medal. (Though having a thrill can be enticing, remember why you’re insured, and that it means taking preventative measures, so always drive with care and caution). Like health insurance, auto insurance is a contract between you – the insurer, and an insurance company in which you agree to make payments of a certain rate on a monthly basis, which is also known as a premium, that is in exchange for protection against car collisions, thefts, and non-collision damages.
If you’re the college student type to have total independence, living in your own apartment and by your own means, renters insurance can help protect all of your belongings and possessions from fires, natural disasters, theft, water damage, and more. Typically, there are three types of renters insurance coverage, each one helping to protect you, your belongings, and your living situation after a loss is covered. It can also protect you if someone on your property is injured. Another thing to know is that the insurance most landlords carry only protects the building, so having renters insurance is the best for you.
Homeowners insurance is what most parents know so well, and what most college kids know nothing about. Obviously there’s a lot more that comes with it compared to renters insurance, but it’s worth getting educated on so that you can ensure your own transition into homeownership is smooth, and to also check in on whether or not your parents currently have the right coverage for the family and household. The financial relief that homeowners insurance provides makes certain that you are covered in the event of damages done to your home, your surrounding property, personal belongings, bodily injuries, and living arrangements if living away from the house is required after damages to the home are done. Without homeowners insurance in place, the financial loss can be devastating and can eventually leave one full of regret. The types of homeowners insurance being offered allows you to decide the amount of coverage and what you may need coverage for. Remember to check in with Mom and Dad to find out what homeowners insurance they have for that extra peace of mind.
Raise your hand if this type of insurance is one you ever want to think about.
We get it, who eagerly spurs at the chance to plan their own demise, or a loved ones? This is no easy topic, but learning how you can protect your family and yourself is something that is as precious as life itself. Life insurance provides money, also known as a death benefit, to your chosen beneficiary after you die. The money it provides can be used to pay for the final expenses after the passing that include funeral or cremation costs, estate settlement costs, and medical bills not covered by health insurance.
Long-term Disability Insurance
As the long-term part suggests, the coverage stays with you over a period of time, from the moment you become disabled due to accident, injury or illness and unable to work or go to school, until recovery or retirement. Long-term-disability insurance plans can last over a period of two years, or two decades. It’s an important safety net for someone who can no longer provide for themselves financially like they once could while working, but by receiving a monthly benefit tied into a percentage of what was earned on their last job before becoming disabled, they are able to be sustained as they once were.
As much coverage as a typical insurance policy provides, it is indeed with limitations. That’s where umbrella insurance comes in. Umbrella insurance is a type of personal liability insurance that covers claims that exceed the basic homeowners and auto insurance coverage amounts. Umbrella insurance policies are especially ideal for those insurers with higher asset levels looking to protect themselves from costly liability claims. A solid way to determine if umbrella insurance is right for you is if you’ve calculated the value of your assets to exceed your auto or home liability insurance limits, then umbrella insurance may be right for you.
Insurance Coverage You Need as a College Student
As a student in college, there aren’t many things you need to worry about apart from your day-to-day hustle and school bustle. And being insured is better than finding yourself in an unprecedented rut your parents won’t make themselves responsible for on their own. That’s why having certain insurance coverage types benefit you greatly, making it worth your while to add alongside your flourishing list of responsibilities. Here are the types of insurance you need:
- Health Insurance – While away in school, the last thing you need is to “ride out” a bad cold or 48-hour bug that leaves you vulnerable to getting much worse before getting better, and to missing out on the time-sensitive things that matter to you the most. When you have health coverage, you may be able to get those prescription drugs instantly or to see your physician in a heartbeat.
- Car Insurance – Driving while in college is nothing short of a victory, and you deserve to enjoy it without worry. Having car insurance is a stress-reliever when you suspect that your parents are peering out from around every corner just to make sure there isn’t any scratch or dent on your car that they’ll have to pay out-of-pocket for.
- Electronics Insurance – Your mobile smart phone, ipad, and laptop are like your furless, inanimate babies that need TLC, and insurance. Insurance protects your electronics beyond what the manufacturer’s warranty covers. The electronics insurance pays for accidental damages and natural disasters.
- Renters/Dorm Insurance – Whether you’re living on or off campus, getting insurance coverage on your personal belongings is a smart move. However, Renters and Dorm insurance differ. Dorm insurance policies cover your personal property and usually have a lower deductible than renters insurance. Renters insurance, on the other hand, includes liability coverage.
- Identity Theft Insurance – Stolen personal belongings is an inevitable part of the college experience. But what makes it more concerning is when identities are taken in the process. Identity theft insurance is meant to cover some of the costs related to identity theft. Apart from identity theft being a hassle and distraction for college kids, it also puts a financial strain on them.
- Insurance – A thing that provides protection against a possible eventuality.
- Premium – The amount of money an insurance company charges for insurance coverage.
- Policy – The written contract of insurance.
- Claim – A request from a provider for payment for benefits received or services rendered.
- Deductible – The amount of the loss which the insured is responsible to pay before benefits from the insurance company are payable. Choosing a higher deductible lowers the amount of your premium.
- Coinsurance – The amount you are required to pay for medical care in a fee-for-service plan after paying off your deductible.
- Disability – Physical or mental incapacity that limits you from movement, senses, and/or inactivity.
- Out-of-Pocket Maximum – The maximum amount you will be required to pay each year for deductibles and coinsurance.
- Collision – Reimbursement for damage done to your automobile after being sustained in a collision with another car, or with an object, movable or fixed.
- Limit – Maximum amount a policy will pay either overall or under a particular coverage.
Books to Learn More About Insurance
Here are a few of our favorite books to learn more about insurance. Head over to our personal finance books for college students library for more great reads!
Insurance: Concepts & Coverage: Property, Liability, Life, Health and Risk Management – an easy to use reference book that provides you with a simple breakdown of the property, liability, life and health insurance coverages.
Dictionary of Insurance Terms (Barron’s Business Dictionaries) – featuring over 4,500 insurance terms, this pocket-sized book is a great source for insurance agents and students alike.