4 Insurances You NEED In Your Mid-20s

Buying insurance is like carrying an umbrella wherever you go. Most of the time, it’s troublesome and bulky. However, when the rain does come pouring down, you're relieved you had it with you all along. For anyone in their mid-20s, here are four types of insurance plans that you must have in your financial portfolio, to prepare you for that sort of rainy day.

1. Health Insurance

Health insurance is a type of insurance that reimburses your medical bills and expenses from hospitalization. There are many kinds of health insurance, from hospital cash insurance to long-term care insurance.

Why Do I Need Health Insurance? No one plans to fall sick or get hurt. However, anything from accidents to hospitalisation can occur. Health issues can sometimes will lead to prolonged financial loss, especially if you have to take a long break to fully recover or you are unable to work until you recover. Thus, it is important to be insured against illnesses so that you are able to manage the medical costs that arise from it. Getting health insurance while you are still young and healthy makes it more affordable for you. Getting it early also prevents you from being excluded from certain coverage!

2. Term Insurance

Term insurance is one that often tends to be overlooked, despite its importance. Term insurance is a type of life insurance that provides protection coverage against an unfortunate event, such as death, total and permanent disability (TPD) or critical illness, over a limited period of time (such as 20 years, or up to age 100).

If death occurs during the period of coverage, your insurer will pay out a lump sum (i.e. sum assured) to your loved ones. Term Insurance does not have cash value as well.

Why Should I Get Term Insurance? Life is short, fragile, and nothing lasts forever. When the inevitable happens, your loved ones are the ones that suffer the most - financially or emotionally. While insurance cannot lessen the emotional pain, it can help with their financial worries. This is especially so if you have dependents that rely on you for income, such as your parents. Your term insurance protection can also be enhanced with riders. One of the most common type is the total and permanent disability (TPD) rider. This is an essential rider to get if your term insurance doesn’t come with coverage for TPD. Apart from TPD riders, there are also other types of riders that you can add on to your basic term insurance plan.

3. Savings Plan

As an aspiring young adult, you must have a list of financial goals that you are looking forward to achieve. These can range from saving towards a big life commitment, such as your dream wedding, to saving for a luxury buy such as a luxury watch or car. In order to achieve these goals, you need to save up a large sum of money.

Why Should I Get A Savings Plan? Having a savings plan helps you to put your financial goal plans into action. It is meant to encourage you to stay committed to your financial goal in a disciplined manner, so that you can save the required sum of money and achieve your financial goal by your desired age. Not to mention, a savings plan may even help you to achieve your financial goal much earlier by investing your savings for you in a safe and diversified manner, allowing you to reap non-guaranteed benefits in the form of bonuses. There are a variety of savings plans available in the market to suit your financial goals and needs.

4. Retirement Plan

Retiring might sound like a long way to go, but it doesn’t mean that it is something you should take lightly. Most people only start planning for retirement when nearing their 40s as the sense of urgency hits. However, only starting to plan in your 40s may be a lot more difficult, since there will be more constraints to work around. For instance, you might have more family commitments and responsibilities that will affect how much you can save towards retirement. More importantly, starting to save late also means you have fewer years to enjoy the effect of compounding interest on your savings.

Why Do I Need A Retirement Plan? This is an important aspect of financial planning to help you prepare for your retirement. During your retirement years, your retirement plan will be your main source of monthly cash flow!

Having a solid retirement plan ensures that you are financially stable and secure during your retirement, and allows you to pursue your desired retirement lifestyle.

So, what are you waiting for?

Don't get drenched when you least expect it! Get a trusty umbrella and you're all set for what life throws at you, rain or hail.