4 Must-Have Insurances & Tips for Choosing the Right Kind

06/26/2015 04:54 pm ET | Updated Jun 26, 2016

Being an adult comes with many responsibilities, and among the most important is purchasing the right type of insurance plans. There are four basic insurance plans a person needs: Life, Health, Car and Rental/Homeowners.
The problem is, with so many different options to choose from, it can be difficult to decide which company and plan will offer you the most benefits without exceeding your budget. Below is a breakdown of each type of insurance you need, and some useful, money-saving tips to help make the process a little easier.

Car Insurance
Did you know that it's possible to get lower car insurance rates if you are married? The reasoning behind this is that married people tend to be more responsible. Because it isn't common for people to file multiple claims at once, if you and your spouse have more than one policy purchased through the same company, you can get lower rates and reduced premiums.

If you're single, there are still ways to save money on car insurance plans. One way is through AAA, the American Automobile Association. With a membership, drivers benefit from free towing and roadside assistance, but they also have a list of partner car insurance companies that, when purchased from one, members can get a group discount on auto insurance plans.

Another way to save money on car insurance is by taking a traffic school course. Yes, this will cost money, but it is very minimal considering the discounts that can stem from it. Most classes can be taken either online or at night, and the discounts can last as long as five years after taking the course.

Home Owners/ Renter's Insurance
The most pressing reason to get home owners or renter's insurance is so you're financially compensated in the event of a fire, burglary, or other unexpected disaster. Obviously, the type you get will depend on whether you rent or own.

It's not just the physical home or apartment you are insuring against--but your belongings and personal possessions as well. Renter's insurance is one of the most important investments you can make to ensure your personal property that isn't protected under the landlord's insurance will be covered. If you're renting, it is important to know that the landlord or homeowner's insurance does not necessarily cover your belongings. You need a separate policy under your own name to cover clothing, appliances, tools, furniture, etc.

If you're looking for the best homeowner's insurance plan, it is best to get one that includes guaranteed replacement costs. Policies that do not include this will leave you with the financial value of your home at the time of purchase. However if it has increased in value, that is a lot of money you would be missing out on.

Tip: Take out a lower premium and higher deductible on your homeowner's insurance.

Health Insurance
Until you are 26, you are typically covered under parents' insurance. But as an adult, you are either looking for an individual health plan or a family health plan. Many fulltime employees are covered under a group plan by their company. But not always.

When shopping for a health insurance plan, ask questions and explore your options. Don't just go with the one that seems the most affordable. Your financial situation is not the only thing you have to take into account. What about your family health history? Think ahead, and prepare for the worst. Look for any loopholes they aren't telling you about. For example, with one plan you might get free vaccines and cheap co-pays at doctors' appointments, but it's possible something like mental health issues aren't covered.

Also, what are their policies for pre-existing conditions? Some companies will deny individuals based on their preexisting conditions. The quickest solution is often to get on a group plan, but if that is not an option, you can sometimes get covered through Medicaid.

Tip: Pay attention to your deductibles. When you raise your deductible, often time your premium will go down. What does this mean? You must pay the amount of the deductible out of pocket before you benefit from the premium. But this is also why it is never a good idea to set your deductible to a higher amount than you would be able to pay right now.

Life Insurance
As much as 33% of U.S. adults are currently without life insurance coverage. No one wants to think about dying. But if something unexpected were to ever happen, you want to make sure your loved ones are protected. The last thing you would want your family to have to deal with in the wake of your death is financial burdens, or to find themselves in desperate circumstances. When it comes to life insurance coverage, a general rule of thumb is to make sure you set somewhere between 8 to 10 times your yearly income aside.

You can get whole or term life insurance. With a whole life policy, full payout is guaranteed and offers the option of borrowing against the policy. It is a lifelong coverage plan with the ability to increase the cash-value amount tax-free. Unfortunately, these often carry premiums that can be quite costly--sometimes as much as 10 times the amount of term.

Term life insurance, on the other hand, is less expensive, but only covers you for a designated period of time--usually in 10, 15, 20, or 30 year increments. You can pay the fixed premiums monthly, quarterly or annually. Most people take this option because it is more affordable upfront, and still ensures your family will be financially protected if you were to die.

There is a benefit to purchasing a life insurance policy young, since the costs tend to much lower and you could get a 20 or 30 year policy that is still in place if/when you have kids. But if you're young and don't have a family, it may be okay to hold off on life insurance until you get a better idea of your future.

Finding the right insurance plans can be a strenuous process, but it doesn't have to be. The most important thing is that you take enough time to do as much research as possible. Sites like can make the process quick and easy by helping you get free insurance quotes, and find the right agents and companies by comparing customer reviews, pricing and rates, and coverage plans.

Remember, regardless of the type of insurance you're looking for, the most expensive insurance mistake you can make... is not having any at all.