So first off, how does insurance work? And why do I need it? Well, insurance companies pool your money and the money of other insured individuals together to create a large fund that can be pulled from when there is a qualified loss.

Your policy is a contract between you and your insurance company. You are paid out of the pool per the contract. In exchange for this, you are required to pay a premium. This premium may be paid monthly, quarterly, or annually.

So, what are some of the common types of insurance?

• Auto: Provides coverage for auto accidents or damage to your vehicle in case of theft, collision, or break-in
• Renters: Provides coverage for losses due to damage or destruction of your rental
• Homeowners: Provides coverage for losses due to damage or destruction of your home
• Health: Pays for medical treatment if you are injured or sick
• Disability: Provides monthly income when one becomes disabled
• Life: Provides coverage after death and is often paid to a family member

P.S. We know disability insurance doesn’t sound necessary for everyone but did you know that you’re more likely to file a disability insurance claim while you’re working than a life insurance claim? Why? Well, about 50% of adults 35 or younger will at some point be disabled for 90 days or longer.

Financial Beginnings is a national 501(c)(3) nonprofit that empowers youth and adults to take control of their financial futures. Their educational programs incorporate all aspects of personal finance to give individuals the foundation they need to make informed financial decisions. Financial Beginnings reaches more than 200 K-12 schools and colleges and more than 100 community-based organizations annually, serving all groups with special focus on populations most in need. For more information, visit www.financialbeginnings.org.