What Types of Insurance Do You Need After High School?

As individuals transition from high school into independence, they face new financial responsibilities. Protecting oneself from unexpected costs is crucial. Insurance provides a financial safety net against unforeseen events that could derail financial stability. Understanding various insurance types is important for a young adult’s evolving needs.

Health Coverage

Securing health coverage is a primary consideration for young adults after high school. Many can remain on a parent’s health insurance plan until age 26, a provision of the Affordable Care Act. This applies regardless of marital status, school enrollment, or financial dependency, extending to job-based and Marketplace plans. For those turning 26, losing parental coverage, or starting a new job without benefits, obtaining an individual policy is necessary.

Health insurance plans cover services such as doctor visits, emergency care, prescription medications, and preventative services. Without adequate coverage, young adults risk financial burdens from unexpected illnesses or injuries. Even a minor accident or health issue can result in substantial medical bills, potentially leading to debt or hindering financial progress. Exploring options through employers, college health plans, or the Health Insurance Marketplace helps maintain continuous protection.

Auto Insurance

For young adults who drive, auto insurance is a necessity, often legally mandated. Most states require drivers to carry at least minimum liability coverage to protect against financial losses from accidents. Liability insurance covers damages or injuries caused to other people and their property if the policyholder is at fault.

Beyond liability, common additional coverages include collision, which pays for damage to one’s own vehicle from an accident, and comprehensive, covering non-collision incidents like theft, vandalism, or natural disasters. Young drivers transitioning from a parent’s policy should note that while some insurers allow continued coverage if the young adult still resides at home or is a full-time student, moving out permanently necessitates obtaining a separate policy. Securing independent auto insurance ensures financial protection for both the driver and others on the road.

Renters Insurance

Young adults moving into their first apartment, dorm, or shared living space should consider renters insurance. A landlord’s policy primarily covers the building structure, not a tenant’s personal belongings. Renters insurance protects personal property from perils such as theft, fire, smoke, certain natural disasters, and vandalism.

This type of policy also includes personal liability coverage, which covers legal expenses and medical costs if someone is injured in the rented space and the tenant is found responsible. Renters insurance is affordable, with average costs ranging from $12 to $23 per month, depending on location and coverage limits. This investment provides peace of mind, knowing that personal items like electronics, furniture, and clothing are protected.

Life and Disability Insurance

While not an immediate concern for all recent high school graduates, life and disability insurance play an important role in long-term financial planning. Life insurance provides financial support to beneficiaries in the event of the insured’s death. It can cover outstanding debts, funeral expenses, or provide income replacement for those who relied on the deceased’s earnings. Purchasing life insurance early can secure lower premiums due to age and health, even if young adults do not yet have dependents.

Disability insurance offers income replacement if an individual becomes unable to work due to illness or injury. This coverage helps maintain financial stability by providing a portion of lost income, which can cover living expenses like rent, utilities, and loan payments. Even for young individuals, the risk of a long-term disability is present, making this coverage important for future earning potential and financial independence.