Do You Really Need Insurance in Your 20s? The Short Answer: Yes
For many young adults, especially those in their 20s, insurance may seem like something you don't need until you're older, married, or have kids. But in reality, your 20s are one of the most important decades to begin building a strong insurance foundation. Life is full of uncertainties, and insurance is your financial safety net for when the unexpected happens.
This comprehensive guide will walk you through the reasons why insurance is essential in your 20s, the types of insurance you should consider, and practical strategies for getting the right coverage without breaking the bank.
Why People in Their 20s Often Skip Insurance
There are several reasons millennials and Gen Z adults put off buying insurance:
Perceived invincibility: When you’re young and healthy, you feel like nothing bad can happen.
Budget concerns: Many 20-somethings are juggling student loans, rent, and basic expenses.
Lack of awareness: Few schools or parents educate young adults about insurance planning.
Complexity and jargon: Insurance language can feel intimidating and confusing.
While these reasons are understandable, the risks of being uninsured or underinsured can have serious long-term consequences.
Why You Do Need Insurance in Your 20s
1. Life Is Unpredictable
You might be healthy now, but accidents, injuries, or unexpected illnesses can happen at any time. Insurance ensures you don’t have to drain your savings or go into debt to cover medical costs, property loss, or liability.
2. Insurance Is Cheaper When You’re Young
Health and life insurance are often significantly cheaper when you’re in your 20s. Locking in a policy now can save you thousands over time.
3. Financial Security and Peace of Mind
Having coverage gives you the confidence to take risks — like starting a business, traveling, or switching jobs — without the fear of being financially devastated by unexpected events.
4. It Builds Good Financial Habits
Insurance isn’t just protection; it’s part of a responsible adult’s financial strategy. Learning how to budget for and evaluate insurance policies teaches long-term financial discipline.
The Must-Have Insurance Types in Your 20s
1. Health Insurance
Even if you’re healthy, medical emergencies are expensive. A broken arm can cost thousands without insurance. Fortunately, under the Affordable Care Act, you can stay on your parents’ plan until age 26. After that, you’ll need your own policy.
How to get it:
Through your employer (if offered)
Via the Health Insurance Marketplace
Under a student health plan (if you're still in college)
2. Renters Insurance
If you rent your home or apartment, renters insurance protects your belongings from theft, fire, or water damage. It also covers liability if someone is injured in your apartment.
Cost: As low as $10–$20/month — a small price to protect your laptop, phone, furniture, and clothes.
3. Auto Insurance
Car insurance is legally required in most states. If you drive, even occasionally, you need coverage for:
Damage to your car
Liability if you injure someone
Medical payments
Shop around and consider bundling policies for discounts.
4. Disability Insurance
Your ability to earn an income is one of your biggest assets. If an accident or illness prevents you from working, disability insurance replaces a portion of your income.
Many employers offer short- and long-term disability plans — check your benefits package.
5. Life Insurance
If you have student loans with a co-signer, or you support someone financially (even partially), a small term life insurance policy is a wise choice. It's incredibly affordable in your 20s and can lock in lower premiums for decades.
Term life insurance (10–30 years) is recommended for most young adults over whole life.
Optional but Helpful Insurance Policies
6. Travel Insurance
If you travel frequently, this can cover trip cancellations, medical emergencies abroad, lost luggage, and more.
7. Pet Insurance
Veterinary costs can be surprisingly high. Pet insurance helps offset the cost of emergency procedures and chronic care for your furry friend.
8. Identity Theft Protection
In a digital world, this policy helps you recover from identity theft or fraud and covers associated legal and financial costs.
How to Afford Insurance on a 20-Something Budget
1. Prioritize Your Needs
Focus on the essentials first: health, auto (if applicable), and renters insurance. Once those are in place, consider adding disability or life insurance.
2. Shop Around
Use comparison websites, contact brokers, or check online insurers like Lemonade, Policygenius, or Gabi. Rates and benefits vary widely.
3. Bundle Policies
You can often get discounts by bundling auto and renters insurance with the same provider.
4. Take Advantage of Employer Benefits
Check if your employer offers group health, life, or disability insurance. These are usually cheaper than buying them on your own.
5. Increase Your Deductible
If you’re healthy and don’t expect to use insurance often, opting for a higher deductible can lower your monthly premium.
6. Budget for It Monthly
Include insurance as a fixed line item in your budget, just like rent and utilities. Automating payments can also help avoid lapses in coverage.
What Happens If You Skip Insurance?
Here are just a few examples of the risks you face:
Medical emergency: A simple ER visit can cost $2,000–$5,000 without insurance. Major surgery? $20,000 or more.
Auto accident: You could be liable for thousands in damages or injuries.
Apartment fire: Without renters insurance, you're responsible for replacing everything you own.
Disability: If you get injured and can't work, you may have no income.
Skipping insurance may seem like a way to save money — but in the long run, it could cost you everything.
Real-Life Scenarios
Scenario 1: Sarah, 24
She skipped health insurance to save money. When she needed emergency gallbladder surgery, she ended up with $17,000 in medical debt that took years to pay off.
Scenario 2: Alex, 27
His apartment flooded during a storm. Thanks to his $12/month renters insurance policy, he got $6,000 to replace damaged electronics and clothes.
Scenario 3: Mike, 29
Got into a car accident and didn’t have enough liability insurance. He was sued and had his wages garnished.
Final Thoughts: Protect Your Future Self
You may be healthy, mobile, and independent now — and that’s awesome. But life is unpredictable. Insurance is not a burden; it’s a form of self-care and empowerment.
In your 20s, time is on your side. Use it to your advantage by getting insured early, locking in affordable rates, and protecting the lifestyle you’re building.
The short answer to whether you need insurance in your 20s? Yes.
The long answer? Absolutely, positively, no question — YES.
Your future self will thank you.
