An important financial responsibility after college is to make sure you have appropriate insurance. So, what is insurance anyway? Wikipedia defines it as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. So, there is the good and the bad. It’s good in that you can transfer financial risk, but bad in that you’ll pay premiums for the coverage. I certainly don’t claim to be an insurance expert, but I can tell you a few types of insurance you definitely want to get as quickly as possible.
Essential Insurance for Life after College
Health or Medical Insurance
If you’ve secured full-time employment with a company after graduating college you’ll have some different medical insurance options to choose from your company plan. Most employers will allow you to choose insurance day one of employment. Let me just say you would be foolish to not have any health insurance. While you might not experience any major health issues, everyone has to see a physician from time to time for illnesses. More than likely, you’re not married so insurance shouldn’t cost much. I think it’s wise to choose the most expensive health insurance you can afford to reduce risk and make sure you’re well covered. If you have a serious illness you’ll want to avoid accumulating debt to pay for treatment.
Car Insurance
Car insurance is required by law if you own a car in most states. You have to at least have liability insurance that will cover expenses if the accident is your fault. You may not have a lot of money out of school, so choosing insurance with a $500 deductible is fine. This means you’ll pay $500 before the insurance agency will start paying any claims. You can get a lower deductible if you can afford it, but a higher deductible and avoiding speeding is a good way to keep this cost down. Also, if you have a clean driving record (no accidents and speeding tickets), your premiums will be cheaper.
Renter’s Insurance
Looking back, I’m not quite sure why I never took out a renter’s insurance policy. Although, I wouldn’t have had much to claim for a theft, it still would have been wise to cover my assets. Make a list of all your possessions and estimate the value of them to determine how much renter’s insurance you need. Also, make sure you have an inventory of your items handy. If you experience a theft or loss the insurance company will want to review the inventory (proof of the loss) before paying your claim. You might also think about shooting a video of your possessions.
Disability Insurance
It’s always a good idea to have some disability insurance. Many people get disabled and lose their primary source of income when they can’t work. The expenses don’t go away, but the income does. That’s why it’s important to lessen this risk with disability insurance. Many employers will offer short-term and long-term disability, but the long-term isn’t typically enough to replace your income. People are often surprised when their disability payments don’t equate to their monthly paycheck, so you may choose to buy some additional insurance outside of your employer’s plan. Just keep in mind, most graduates don’t have a family to support after school, so be mindful when determining how much you need.
Other Insurance Tips
- Shop around. Get at least 3 quotes for each type of insurance you’re not purchasing through your employer.
- Try to get your insurance with the same company. Most companies will offer discounts for insuring auto and home (or renter’s insurance) together.
- Don’t hesitate to ask insurance companies what discounts are available. Also, some employers can get discounts with insurance companies, so check with your HR department to determine what relationships are in place.
- Check with your insurance agent before purchasing a car. Some makes and models are more expensive to cover.
- As much as you may not like it your credit is important when saving money on insurance. Make sure you pay your bills on-time.
- Do you need life insurance? I would skip it for now unless you have a family. When you get married, look into purchasing a term life insurance policy. Avoid whole life insurance, but that’s a subject of another post.
What do you think about these life after college insurance tips?
About Jason Price