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Thursday, August 18, 2011

Insurance Tutorial


 Insurance sounds boring doesn’t it?  You know what isn’t boring? Going through a true emergency insurance would help pay for and not having any insurance.  You might be thinking that your parents have taken care of your insurance, or you might be worried over the fact that you don’t have any insurance.  There are several kinds of insurance that are important to know about…let’s go over things.


Let’s start with the most important type: health insurance.  Thanks to some health care reform laws, if you’re under 26 your parent’s insurance can still cover you. The thing you need to find out is if your current health insurance is accepted by the student health facilities at your college or university, or at the local hospital and doctor’s offices.  Some colleges/universities offer what are called bridge plans.  These health care plans allow you to use your current health insurance coverage, but covers the additional costs of out of network health care and expenses.

 Not everyone has the luxury of being able to stay on their parent’s health insurance.  Some people’s parents have been laid off and haven’t been able to keep their insurance, while other’s just never had insurance, or they are too old to stay on the plan.  What do you do?  There are many health insurance brokers out there who can help you find the policy that best suits your needs. Since you are young you’re lucky that health insurance isn’t usually expensive (unless you have a pre-existing condition).  Many colleges and universities also offer insurance plans that students can buy into that are fairly low in cost (it is still important to compare to private insurers because they can be less expensive).  The downside is once you’re done with school you will need to find your own insurance. 

It may also be tempting to go with less expensive health insurance plans that are lower in quality because you’re young.  You won’t ever get sick, right?  Wrong!  Most people won’t get cancer, or some other scary expensive disease, but many of you might break an arm, or have your appendix removed.  My fiancĂ© had his appendix removed (30 days before his insurance went into effect) and it cost about $16,000.00. These common ailments can be extremely costly and a cut rate health insurance plan won’t cover everything you need covered.

Car insurance is also important.  If you can swing it, it may be better not to own a car, but if you must own a car insurance is not only required it is important.   The general rule of thumb is that if your comprehensive car insurance costs more than 50% of the value of your car each year then you should switch to minimum liability.  I say if you don’t have the money to replace your car if the vehicle is totaled in an accident hold onto the comprehensive car insurance.   $4,000.00 might not seem like much to someone who has established their finances and has been out working for years, but for a college student barely making ends meet $4,000.00 can be an impossible sum.

Renter’s insurance is just as important as car insurance.   Don’t cut corners here either.  Get full replacement coverage because if something happens like your dorm/apartment/home is burglarized or burned down you may not be able to get enough money to replace all of your possessions.  Traditional renter’s insurance will only give you a devalued amount of money. 

One more note on insurance.  Check around.  You should get quotes from at least 5-10 companies before choosing a plan.  Make sure you are getting the best deal, and make sure that the insurance is explained to you so that you understand it.  If you don’t know what a deductable is ask…it is better to appear foolish now than to lose your shirt later.
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