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PROTECTING WHAT MATTERS: INSURANCE MADE SIMPLE FOR TEENS

    When most young people think about money, they focus on earning, spending, or saving. However, understanding insurance and financial protection is an equally important part of financial literacy.

    Insurance is a tool that helps protect your money and possessions against unexpected events, such as accidents, illnesses, or property damage. Learning about insurance early can prepare you for a more secure financial future.

    At its core, insurance is an agreement between a person (the insured) and an insurance company (the insurer). The insured pays a regular amount of money, known as a premium, in exchange for the insurer’s commitment to cover certain risks or losses that may occur in the future.

    The insurance company collects this premiums to create a fund, which is then used to compensate those who suffer a covered loss. In your policy, you might see the term Indemnity, which refers to the insurer’s promise to restore you to the same financial position you were in immediately before the loss, subject to certain exclusions and limitations.

    How Premiums work: Insurance requires paying a regular fee, usually monthly or yearly. This fee is calculated based on risk factors, such as your age, the type of coverage, and the value of the item or service insured. In return, the insurance company promises to cover certain costs if an insured event occurs.

    1. Types of insurance for young people:
    2. Health insurance: Covers medical expenses, doctor visits, or emergency care. Young people may still be covered under family plans, but it’s important to understand what is included.
    3. Travel insurance: Protects against trip cancellations, lost luggage, or medical emergencies abroad. Ideal for students or young travelers.
    4. Gadget or electronics insurance: Covers damage or theft of phones, laptops, or other devices, which are valuable for teenagers and young adults.
    5. Car insurance: If you have a car or plan to drive, car insurance is mandatory in many countries and protects against accidents or theft.
    6. Key points to know about insurance:
    • Understand premiums: Know how much you pay, how often, and what the coverage includes.
    • Read the policy carefully: Policies may have limits, exclusions, and conditions. For example, some gadgets are only covered for accidental damage but not for loss or theft. Understanding these details prevents surprises.
    • Starting small: Even if you are young and don’t have many possessions, it’s possible to start with small insurance policies. Travel insurance, gadget protection, or student health coverage can be a good first step. These policies teach you responsibility, planning, and the importance of protecting your money.
    1. Practical advice for young people:
    • Always compare policies before buying to find the coverage that fits your needs.
    • Ask questions if something is unclear. Talking to parents, teachers, or financial mentors can help.
    • Keep track of your premiums and coverage dates to avoid lapses in protection.

    By learning about insurance, young people gain confidence in managing financial risks, protect their belongings, and avoid large, unexpected expenses. Financial literacy isn’t only about earning or saving, it’s also about being prepared for life’s uncertainties, which is a skill that will benefit you for a lifetime.

    References:

    Allianz Ireland. (n.d.). What is insurance? https://www.allianz.ie/products/schools/schools-insurance/safety-security/what-is-insurance.html

    Bhartiaxa. (n.d.). Different types of insurance. Bhartiaxa. https://www.bhartiaxa.com/life-insurance/types-of-insurance

    Investopedia. (n.d.). Understanding insurance premiums: Definitions and types. Investopedia. https://www.investopedia.com/terms/i/insurance-premium.asp