How the Young Find Insurance

Nov. 04--Millennials, also known as Gen-Yers, born between the early 1980s and early in this century, often fail to see insurance as part of their young-adult financial picture. Wrong: Despite saving fledgling paychecks, rookie investing and whittling student debt, insurance must figure highly in their financial planning. Here's why.

Every person's situation differs, so work with a financial planner to make sure you carry appropriate coverage. Many young adults unready to invest in a planner still benefit from learning basic insurance guidelines on where to start.

Health insurance. Sign up for coverage through your work, stay on your parents' insurance through age 26 or buy an individual policy. Also, on the new health-care exchange, anyone under 30 qualifies to buy a catastrophic plan covering preventative care plus three primary-care visits.

During open enrollment for the new exchanges, shop for a policy on www.healthcare.gov. If you buy a policy on the exchange, you may qualify for a tax credit if your annual modified adjusted gross income falls below 400% of the federal poverty limit (meaning individuals making less than $44,960 or a family of four making less than $94,200 qualifies).

You can only purchase insurance on the exchange during open enrollment, which ends March 31, 2014.

Property and casualty. We often think of auto, homeowner's or renter's insurance as unchanging expenses. Really? When did you last shop for an auto policy? Detail the coverage limits are on your homeowner's insurance? Are your policies bundled?

If your policies gather dust in a drawer now or you are a first-time policy shopper, find a local independent insurance agent. They typically work with 10 to 20 carriers to bundle policies based on your situation -- sometimes also more affordably.

Umbrella insurance or excess liability covers you beyond terms of your auto and homeowner's policies. The minimum coverage of $1 million costs you about a couple hundred dollars a year and provides extra protection if you get into serious auto accident, contribute to someone's personal injury on your property or if you get sued, to name three examples.

Term life. Even a Gen-Yer whose children or spouse depends on your income needs life insurance. Most need only a 20- or 30-year term life policy with coverage amounting to seven to 10 times your salary.

Often, you can get this insurance through your employer -- meaning that if you lose your job, you also lose your life insurance. Consider such a policy independent of employment, which sometimes comes cheaper than group coverage if you're young.

Other reasons you might need life insurance:

* Unlike federal student loans, private student loans are often not forgiven at death. Carry a policy large enough to at least cover any of your private student loans.

* If you own a home with a mortgage and want to pass that home to your heirs, purchase a life policy if your assets fall short of paying off the mortgage.

* Life insurance can help fund children's college education.

* Stay-at-home parents need coverage, too: If you die and your spouse must go to work, he or she must hire a nanny or pay for other child care.

Supplemental disability. Income stream is a Gen-Yer's most valuable asset. Take advantage of any group long-term disability policy through your employer. For some, the 40% to 60% coverage through such an employer plan falls short.

Supplemental disability insurance covers an additional amount, usually around 20% to 25% of your income. If you lack long-term disability, a supplemental policy becomes important.

And believe it or not ,at your age, so does most insurance.

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Sophia Bera, CFP, is a fee-only financial planner that caters investors in their 20s and 30s. She has been in the financial planning industry since 2007 and is the founder of Gen Y Planning in Minneapolis. She works with clients throughout the U.S. She has been quoted on various websites and publications including Forbes, Business Insider, AOL, Yahoo, Money Magazine, The Fiscal Times, Fox Business, and The Huffington Post Money Under 30 recently named her one of the "Top Financial Advisors for Millenials."

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