In addition to landing a decent job and facing heaps of student debt, most graduates will have to deal with another adulthood hurdle this summer: buying insurance.
It’s common practice for insurance companies to boot children off family policies when they, well, stop being children. Or, in other words, when they turn 23 or graduate from college.
Insurance shopping isn’t fun, regardless of whether it’s auto, home, renters’, health, life or any other variety. There are forms to fill out, policies to review and suburban offices to visit. And, unlike shopping at the mall, insurance offices don’t have food courts.
But just like shopping at the mall, there are bargains and specials that can make the experience a lot more enjoyable.
Holley Kramer, a representative with Farmers Insurance Group, said if students graduate with a four-year degree and at least a 3.0 grade point average, they will get to keep their “good student discount” of 25 percent on auto insurance until age 25. Also, some agencies will take another 10 percent off their auto insurance if graduates also sign up for renters insurance.
The renters insurance policies that most graduates choose cover about $15,000 worth of belongings for $8 to $10 a month, and it covers up to four people. While recent graduates might not worry about insuring their $10 bargain couch and chair set, it’s most valuable in cases of expensive personal liability suits.
“If someone has to walk up the stairs to your apartment, and slips and falls, you could be held liable,” said Laurie Hanten, a supervisor at State Farm Insurance. “renters insurance would not only cover the liability, but it also would cover the legal fees involved.”
With such cases in mind, insurance agents suggest that a person always be covered by renters insurance. For health and life insurance, however, constant coverage isn’t a necessity.
“Health insurance and life insurance aren’t absolutely necessary for the first few years a graduate is out of college,” said Nila Grant, a representative with American Family Insurance. “But you should always consider getting these policies early. Health and life insurance policies are a lot cheaper if you get them right away.”
For instance, 23-year-olds can get a $50,000 life insurance policy for about $30 a month. But, if a person waits ten years to buy the same policy, the monthly rate could double, Grant said. A similar strategy works for health insurance.
If insurance is applied for right away, and with their parents’ company, graduates can cut out the entire insurance application process. And, once the policy goes into effect, insurers are required to give graduates the same benefits under their new plan as they had under their parents’, although the individual plan will usually have a higher price tag.
“Insurance is a tough thing to figure out. Just make sure that you get a professional agent that will lay everything out on the table for you, and help you sort it all out,” said Pat Egan, an underwriting administrator at State Farm. “Making sure your agent is someone you trust is the main thing.”
For personal insurance advice, most agents offer free consultations.