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Insurance
Section I / Section
II / Section
III / Section
IV
Have health insurance to cover most or all of your medical and hospital expenses. During college you may have health insurance coverage under your family's health care plan. If you do not have coverage through your family, the college you are attending may offer a plan to which you could subscribe. You may consider obtaining your own coverage through the same company that covers your family's health care plan.
A major medical plan covers 80 percent of hospital and doctor bills beyond the deductible. Select a plan that does not limit coverage for certain serious illnesses. Purchase a broad-coverage health care policy rather than a policy that provides coverage only on a certain illness such as cancer. When you finish college or reach 22 to 25 years old (depending on the company), you will need to purchase your own health insurance. Be sure to purchase temporary stop-gap major medical insurance for the time between graduation and employment in case you have an accident or illness. Upon employment, you will select among several health-care plans.
Participate in "flexible spending accounts" which is money set aside before it is taxed. They can cover required education, health costs not covered by the group health insurance such as dental or vision, and the 20% co-pay for which you are responsible after insurance pays. Thus the actual cost, because of use of pre-tax money, is less than otherwise.
If you own a car, in addition to the other costs of maintaining it, you must have liability insurance coverage. When purchasing auto insurance, consider both coverage and the cost of the coverage. The amount you are charged for insurance coverage may be determined by your driving record, the vehicle that you own, your credit history, the grades you maintain while in school, and how far the university you attend is from your home (100 miles or more lowers premium costs). Using the address at school lowers cost. (Older cars = less expensive insurance).
Comparison shop for premiums. They will differ by thousands of dollars for the coverage.
- Bodily injury liability occurs when you cause an accident. This coverage pays the medical, rehabilitation, and funeral bills of the passengers in your car as well as the other driver, his/her passengers, and any injured pedestrians. It also covers pain and suffering awards as well as legal costs. Obtain at least $100,000 per person and $300,000 per accident. If you own sizable assets, such as a stock portfolio or an expensive home, consider raising your coverage limits to $250,000 per person and up to $500,000 per accident for your increased protection.
- Property damage pays to repair or replace another person's vehicle or other property damaged by your car. Typically, $10,000 to $25,000 is required by states. Coverage of $100,000 is recommended plus a supplementary liability policy also known as "umbrella coverage."
- Uninsured, and underinsured-motorist coverage pays for medical bills, rehabilitation, and funeral costs, as well as losses for pain and suffering incurred by you or passengers in your car when an accident is caused by a hit-and-run driver or someone who has little or no insurance. Carry at least $100,000 per person and $300,000 per accident. If you carry higher coverage for bodily injury liability, you should increase this coverage to that same level.
- Collision Not required but optional, pays to repair or replace your car no matter who caused the accident. Comprehensive pays to repair or replace your car after it has been stolen or damaged due to a storm or other natural disaster. Coverage is the amount of damage over and above your deductible. Select the highest deductible you can afford, preferably no less than $500. Cancel the coverage when the annual premium equals 10 percent of the book value of your car.
- Personal-injury protection reimburses you for lost wages and for in-home care. Coverage you need is whatever minimum your state requires. Your health care and disability policies should cover these needs.
- Medical-payments coverage covers medical bills for you and your passengers, regardless of who is at fault. If you have good health insurance, you probably do not require this coverage for yourself. You should carry about $5000 to protect your passengers who may not have health insurance.
For young people, long term disability income insurance is more important than life insurance. Disability income insurance replaces a portion of the income lost when you cannot work due to illness or injury. Should you become sick or disabled, it is important to have insurance coverage that will provide a monthly income to support you while you are unable to work. If you have been employed in which you have paid Social Security and met the required term for coverage, you have some disability insurance.
Know how a disability is defined. An own-occupation policy provides benefits if you can no longer perform the occupation you had at the time of disability. An any-occupation policy provides benefits only if you cannot perform any occupation. Evaluate carefully the costs and kinds of disability income coverage that are available.
Social Security disability benefits are available to eligible fully insured disabled workers. The period of disability must last at least 12 full months. The disability must be total, that is, you will not receive any benefits if you can perform any work for pay. To be eligible for Social Security disability income benefits, you are required to have attained "credits" under Social Security guidelines. College students who are employed and paying taxes are gaining "credits."
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