Insurance for the young and single

By Liz Pulliam Weston

If you're young and single, when you think about your finances, you're probably concerned most about debt, with an occasional nod to saving for a home or retirement. If you think about insurance at all, you're a rarity.

But certain kinds of insurance coverage are important to have -- even when you're young and unencumbered. Here's what you need (and what you probably don't):

Must-have insurance

Disability insurance. At this point in your life, your earning power is your greatest asset -- and the asset you should worry most about losing. Insurance experts will tell you that you're far more likely to be disabled during your working years than you are to die.

It's true that government programs provide some disability coverage, but they're pretty restrictive. Workers' compensation funds, for example, will pay you only if you're injured on the job. Get hurt at home or suffer a disabling illness, and you're out of luck.

Social Security disability payments are even harder to get. The system covers only total and long-term disability, not partial disability or short-term problems. You have to prove that you're so disabled you can't do any job -- not even flipping burgers or telemarketing -- to get benefits.

So if your employer offers disability coverage, sign up for both short-term and long-term coverage. If you're given the option, buy enough coverage to replace 60% of your income -- more if you can get it.

If your employer doesn't offer group coverage, you can contact one of the major disability insurers, such as UnumProvident, Hartford or MetLife, to get quotes. Getting an individual policy is tougher, and often more expensive, than buying a group policy.

Health insurance. You feel great and you never go to the doctor, so you don't have to worry about health insurance, right? Wrong.

An accident or illness can get expensive in a hurry. Get health insurance through your employer, or on your own (get quotes by ZIP code). You can keep down costs by buying a high-deductible or so-called "catastrophic" policy. This requires that, in the event of illness, you pay a significant amount of money out of your own pocket before the insurance kicks in. But the policy protects you if medical bills climb into the hundreds of thousands of dollars.

Renters insurance. If your apartment building were to burn down, your landlord probably has a policy that would rebuild the structure. That policy almost certainly won't pay to replace your stuff.

Video: Everyone needs an emergency fund

So if you have anything worth owning -- clothes, a computer, stereo system, television -- you probably need a renters policy.

The good news is that renters insurance is relatively cheap. For $150 to $300 a year, you can usually get coverage to replace about $35,000 of your stuff. You'll want to get "replacement cost" coverage, which would give you enough money to buy a new computer, for example, rather than "actual value" coverage, which cuts you a check for the much smaller amount your computer is worth now.

As with all insurance, you should shop around for good rates from a decent company. Check to see if your auto insurer offers this coverage, because you may qualify for a discount by getting both policies from the same company.

Continued: Coverage you don't need

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