Insurance. Is it a gamble or necessity? As a young man, I was in the gamble category, after all, I am invincible, right? Wrong. I never gave a thought to insurance until July of last year when I needed emergency appendectomy. I was in Florida visiting my Grandmother when I did not feel so good. Some six hours later, one frantic ride down the highway, a two-hour surgery, and three nights stay in recovery – I now get why insurance is so important. The hospital bill was a little over $18,734. This included the ambulance ride, an emergency room charge, an emergency room doctor charge, medication charge as well as a bed check in charge, operating room charge, operating room doctor charge, anesthesiologist charge, recovery room charge…..and the list goes on. Although my parents were there to help me, my Dad owns his own business and money is always tight and we were thankful that we had insurance coverage which lowered the amount we had to pay from nearly $19,000 to only $2,100 in co-payment charges. That made me want to understand how that works. What was the premium we had to pay for this benefit? When do you have to get healthcare coverage? What happens if you don’t have it? My parents helped me pay the cost but what this experience did for me is help me see and understanding the benefits of insurance as a necessary part of learning how to be financially healthy. I learned that the insurance coverage was through my mom’s employer and, although she pays for some of the cost, her employer pays for a large portion of what is called the “premium”. When I graduate from college, I need to understand how this works for me when I am negotiating and accepting an employment position. If it was not for this experience, I am not sure I would consider the importance of health insurance coverage as a benefit, or even as a necessary expense. As I embark upon my journey towards an independent adult, and knowing that I will be faced with a mound of student loans, all new living expenses and budgeting constraints combined with what will likely be a deficient income to match my mind’s eye as to what my standard of living should be, I need to fully appreciate the role insurance will have in protecting my health and wellbeing. But protecting myself from things like a personal catastrophe such as an unexpected health care emergency is not the only form of insurance that is important to understand as there are other insurance products that make smart money sense. Take renters insurance for example. The expenditure is well worth the protection and I have taken the lesson learned and applied it in other situations. Most recently, I have decided and am planning to share an off campus apartment in Boston with some of my fellow students. When we sat down to figure out costs I raised renter’s insurance to which everyone sort of laughed at me. I explained about what happened when I was sick and how insurance can help protect us if something was to happen. Each of us has a computer and add in the x-box and flat screen television set, why would we not protect ourselves? The all agreed and we have included a budget line item into our planning. When money is tight, as it is here, budgeting is the best solution to ensuring you provide for necessary living expenses and that should also include a solid plan for insurance. Part of the problem in convincing my schoolmates was their lack of understanding on how insurance actually works. When we looked into how much it actually costs and the amount of protection it afforded us as a group, all were in agreement that it makes sense. We don’t even give buying a latte at Starbucks as much thought as it took the group to agree to buy renters insurance yet we all pull out our wallets easily for that daily expenditure with any cost benefit analysis. That is a culture that should be changed amounts my peer group. I think it actually starts in high school. Although we are required to take several mandatory classes on finance and accounting and most pass the courses with flying colors, do they actually help us understand common financial concepts like insurance? The majority of effort is sent on other topics but very little focus is spent on the principles of insurance. If it was not for my experience with medical bills, I don’t know if I would have cared. I do now, and wonder if, as a country, we should require our educational system to provide more learning to young adults about this important financial tool including the cost of not having proper insurance. This is even more needed now that we have national healthcare and we as young adults, need to understand the consequences and penalties of not having coverage to make sure we proactively incorporate that into our budgeting and lifestyle choices.
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