Why You Should Have Insurance As a Young Adult

Being young is beautiful. Typically, you are in your best health, and you still have your goals and ambitions of making it big in life. When young, you tend to be interested more in living in the moment rather than planning the future. And if you think about the future, it is mostly in terms of investment and not insurance.

As much as it is a great idea to live in the moment, it is advisable to think of the future and cushion yourself against any unforeseeable circumstances. That is where insurance comes in. 

There are different types of insurance, including health insurance, life insurance, car insurance, travel insurance, personal accident insurance, asset insurance, and education insurance, among others.

All these types of insurance are supposed to cover you in different situations. For instance, life insurance protects your loved ones from having to incur expenses of your sendoff and any arrears you might have had in terms of loans and such arrangements after your demise. Health insurance takes care of your hospital bills in case of illness. 

However, each insurance has its provisions depending on the provider, how it has been productized, and the amount of money paid in installments. 

Let us understand further why you should have insurance as a young adult and what types are good for you.

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Protection from Unexpected Events

The primary use case for insurance is to cover you against unexpected events. For instance, you have bought your first car. When you get on the road, there is no telling what can happen. Car insurance covers your vehicle in case of an accident. Depending on the type of car insurance you have, the insurer will cover the damages.

Health is another area that is essential to have insurance. You never know when a disease will show up. Hence, you need insurance ready to jump in and help you take care of the hospital bill in case of an illness. Health insurance can also cover your spouse and children, depending on the package you sign up for. 

Insurance is a safety net in times of crisis. Taking insurance is a proactive way of living by ensuring that you are protecting yourself against unforeseeable calamities. Without insurance, you can easily be caught flat-footed, which might lead to extreme stress when dealing with the crisis.

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Financial Security for Loved Ones

By taking insurance and protecting yourself against a crisis, you also protect your loved ones financially. A good example is health insurance. With health insurance, the insurer takes care of your hospital bills in case of an illness. Whereas, without the insurance, your loved ones would have had to chip in to settle your hospital bill.

On the other hand, with products such as life insurance, you provide a safety net for your loved ones in case of demise. For instance, if you had a family and you met your death, your insurance package will be paid to them. Such insurance ensures that even after your departure, your family is still well cared for financially.

However, it is uncommon for young people to be thinking about their departure. That typically happens later in life. But you never know when your time is coming. Growing old is not a guarantee. Secondly, locking in an installment when young is relatively cheaper than when advanced in age.

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Asset Protection

I recently had a friend whose household items were stolen. Somehow, the thieves entered his house and made away with some electronics and other valuable items. This set him back quite a bit because he was just furnishing his house, and for him, buying the items was a significant investment.

Had my friend taken an insurance cover against his household items, he would have been compensated for such a loss. But unfortunately, he had not. Now he has to redo the furnishing again.

As young individuals, you are building up your life and getting assets and investing, so it is wise to protect those assets and investments. Life is unpredictable, and you can never tell what will happen to the things you have invested your sweat and tears to acquire. 

Without insurance coverage, you might be forced to start again from square one if a disaster strikes.

Affordable Premiums for Youth

Insurance for youth is affordable. From a risk analysis point of view, covering a youth is less risky than covering a person in their old age. A youth is relatively healthier and has a long life ahead of them. Therefore, their premiums are lower. 

A good example is during the Covid-19 pandemic. The older people were more vulnerable to the disease compared to the youth. Hence, for an insurer, it is riskier to cover the old than it is to cover the young. 

For insurance types such as life insurance, young people pay less in premiums because they have a long life ahead of them and will pay the premiums for many years to come.

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Long-Term Financial Planning

Another insightful way of approaching insurance is as a long-term financial plan. First, as you build yourself financially by investing and buying assets, it is wise to protect what you have built in case of calamity. 

Calamity might not strike today or tomorrow, but that does not mean it is not looming in the distant future. Insuring the assets and investments dear to you ensures you do not lose everything and have to start from scratch.

Secondly, with particular insurance, such as life insurance, you can use it to build wealth since you can borrow against the insurance. If you want to invest further, you can use your life cover as collateral to access a loan from a bank.

Taking insurance is long-term planning, which is advisable for anyone interested in building a brighter future for themselves and their loved ones.

Read Also: Planning For Your First Child? It's Time To Start Thinking About Insurance

Insurance as a Legal Requirement

In Kenya, the mandatory insurance that one must have is third-party vehicle insurance. Third-party vehicle insurance covers liability for injury or death to other people and damage to property caused by the insured vehicle. Failure to have this insurance will cause you to commit a traffic offense and can face legal consequences, including fines or potential impoundment of the car for non-compliance.

Other types of insurance, such as the NHIF, are enforced by the government. All employers, including the government, must remit NHIF installments for their employees. The current government is working to restructure how the current government health insurance works through the Social Health Insurance Act.

Wrapping Up

Insurance is not a popular topic among the youth. However, that does not undermine its importance. For any young person interested in building a more productive, secure future, insurance should be part of their strategy. Insurance will help protect against the downside and calamity that life might spit out.