3 Necessary Insurances to Cover You When Life Happens
Entering adulthood brings much freedom: deciding where to live, how to spend your money, and what your daily routine looks like. But with that freedom comes responsibility, and one of the most important is protecting yourself from unexpected (and costly) surprises. That’s where insurance is helpful, not to add an expense, but to provide a financial safety net when life surprises you.
Health Insurance: Your Non-Negotiable Safety Net
You might feel invincible now, but health insurance is a kind of protection you shouldn’t skip. A simple medical procedure, ER visit, or trip to urgent care can cost hundreds or thousands without insurance. Usually, if you're under 26, you join or stay on a parent’s plan. If not, your job or the Marketplace is your next best option.
You'll need to understand four key terms: premium (the monthly cost), deductible (the amount you pay before insurance kicks in), copays (fixed charges for visits), and out-of-pocket maximum (the most you'll pay in a year).
Most health plans fall into three categories:
PPO (Preferred Provider Organization): PPOs offer the greatest flexibility; you can see specialists without referrals and go out-of-network if necessary. The trade-off? Higher monthly premiums.
HMO (Health Maintenance Organization): HMOs require you to choose a primary care doctor and get referrals. They are usually more affordable but limit you to a specific network of providers.
HDHP (High-Deductible Health Plan): These plans offer low monthly premiums but come with higher deductibles. Typically, HDHPs could be suitable for someone who rarely needs medical care and is willing to save money in a Health Savings Account (HSA).
Remember, health issues can appear unexpectedly, so it’s helpful to take a moment to weigh each plan’s advantages and disadvantages.
Auto Insurance: Protection on the Road
If you drive, auto insurance isn't optional; it’s one of the most crucial protections you’ll have. Coverage differs, but understanding the fundamentals helps you avoid overpaying or being underinsured.
Bodily Injury Liability covers injuries you cause to others.
Property Damage Liability covers damage you cause to other people’s vehicles or property.
Collision Coverage pays to repair or replace your car if you crash into something.
Comprehensive Coverage protects against non-collision events such as theft, fire, hail, or flooding.
Medical Payments helps pay for your or your passengers' medical expenses, regardless of who is at fault.
Uninsured Motorist Coverage protects you if someone hits you and they don’t have insurance; this might be more common than you think.
Renters Insurance: Not to Be Confused With Home Insurance
If you're renting, whether it’s an apartment or a house, renters insurance is one of the most affordable ways to protect your belongings. Your landlord’s insurance covers the building, not your personal property.
Renters insurance typically covers:
Theft
Fire
Smoke damage
Vandalism
Certain water damage
Liability if someone gets hurt in your space
To determine the right coverage amount, quickly list and evaluate your belongings, such as furniture, electronics, clothing, and kitchen items. You’ll also need to select between:
Actual Cash Value: Pays the item's value minus depreciation (cheaper but provides less coverage).
Replacement Cost: Covers the full cost to replace items today (a bit more expensive, as replacement costs may rise over time).
Deductibles vary, and your premium depends on the amount you choose. You can also buy a floater, rider, or endorsement for items like jewelry, instruments, or collectibles that exceed your policy limits.
Bottom-line
Insurance isn’t about expecting the worst; it’s about protecting the life you’re building. Health, auto, and renters insurance build a solid foundation that helps prevent one unexpected moment from turning into a costly setback. The goal is simple: stay safe, stay covered, and stay confident as you embrace your independence.
Disclaimer: Creek & Lyells Financial Literacy Foundation does not provide financial services, nor does it recommend or advise visitors to open accounts or buy or sell securities. All content on this blog is for educational purposes only. While we strive to provide accurate, relevant, and well-vetted information, visitors should consult a licensed financial professional and carefully evaluate the risks of any financial decision before taking action.