Photo by Brooke Cagle on Unsplash

When you’re younger, it’s easier to take insurance, especially health insurance, for granted. As an adult, however, you’ll have to pay the full cost of your coverage, and you may find that the cost isn’t worth the protection it offers in certain situations. You should always keep in mind the financial costs as an adult and look around for affordable pet insurance and full coverage health insurance, however, to really understand all you need you should learn the basics about types of insurance. With that in mind, here are six types of insurance that all adults should know about and understand so they can make informed decisions about their own policies as they move forward in life.

6 Types of Insurance You Should Know About as an Adult

1) Health Insurance

Without health insurance, it can be difficult to afford medical care if you’re ever injured or fall ill. If you get hurt and aren’t insured, hospital bills could total more than $10,000 a day. So it’s important to buy health insurance before there’s a need for it—not when you need it. Even if you're covered by your employer's plan through work, you still might want to consider buying a separate policy: your employer's coverage may not include everything that's in your must-have list.

2) Homeowners/Renters Insurance

Everyone needs to own a policy that protects their property and financial assets in case of loss. There are two types, standard home insurance and renters insurance. Homeowners insurance covers your house and its contents against perils such as fire, theft, and windstorms. Renter’s insurance is exactly like it sounds: it covers your stuff while you’re renting. If you can swing it financially, both types are a smart investment because they cover liabilities that aren’t covered by your health or auto policies (like those pesky lawsuits). And remember: if you live with roommates or family members who have been named on your lease, they need their own coverage—so factor in extra cost for them when calculating premiums.

3) Auto Insurance

Auto insurance is required in many states, but that doesn’t mean you can’t do without it. If you’re young and in good health, your rates will be high no matter what. Consider eliminating auto insurance if you live in a safe area and are financially stable. Otherwise, make sure to protect yourself with state-required coverage such as liability, property damage, and personal injury protection (or PIP). If you have a car that's 10 years old or less (and your annual mileage is 12,000 miles or less), collisions may not be worth it—your rate could increase by 15% to 30%. 

4) Life Insurance

The purpose of life insurance is to replace income to support your family. When you pass away, a lump sum payment is made from your policy directly to your family or beneficiary. Typically, a death benefit will be paid in exchange for premiums that are paid over time. There are various types of life insurance policies you can choose from based on risk tolerance and need. Most experts recommend having at least six months’ worth of living expenses in savings if you do not have life insurance through work or another program like Social Security. 

5) Pet Insurance

Many people make pets a part of their family, meaning your canine or feline is often at least as important to you as any human. If you’re financially responsible for a pet, then consider pet insurance to protect against unexpected medical emergencies. For example, dog dental insurance can help pay for dental procedures that may not be covered by basic pet health plans and many pet owners have seen thousands in savings thanks to affordable dog dental insurance. As with most insurance policies, it’s best to research providers and find one that covers procedures your pet is likely to need; some policies don’t cover things like wellness care or preventative veterinary care.

6) Disability/Critical Illness Coverage

Disability and critical illness insurance work in a similar way: The former will replace a portion of your income if you’re unable to work due to an illness, while critical illness payout a lump sum if you contract one of dozens of serious illnesses. Critical illness coverage is generally cheaper than disability insurance and many believe it should be a priority—but it's usually not something that can't wait until you've saved up more money. Both are important types of coverage for adults.