Why Insurance Deserves a Place in Your Money Talks

Why Insurance Deserves a Place in Your Money Talks

Insurance usually doesn’t come up first when we talk to our kids about money. It’s not as exciting as investing or as hands-on as budgeting. But it’s one of the most essential and most often ignored parts of a strong financial plan. When kids grow up without exposure to how insurance works, they reach adulthood with serious gaps.

Start with What They Already Own

Try asking your child, “What would you do if your phone got lost or stolen tomorrow?” That question opens the door. Most kids depend heavily on their devices, but few know if they’re covered or what protection looks like. This is a natural way to start talking about warranties, extended coverage, deductibles, and insurance.

Dorm Rooms vs. First Apartments

As kids head off to college, they move into new responsibilities. If they live in a dorm, their belongings may be partially covered under your homeowners insurance. But once they get an off-campus apartment, they’ll likely need renter’s insurance. Many students wrongly assume their stuff is automatically protected.

Use this cheat sheet to walk through the basics with your child:

• Dorm Room
  May be covered under your homeowners policy, but often only up to a limited percentage. Check your policy for details.
  
• Apartment Rental
  Not covered by your homeowners insurance. They’ll need their own renter’s insurance policy.
  
• What Renter’s Insurance Covers
  
• Personal belongings: Includes electronics, clothes, and furniture.
  
• Liability: If someone gets injured in the apartment.
  
• Loss of use: Helps cover costs if they need to live somewhere else after a covered event.
  
• What It Doesn’t Cover
  
• Roommates’ belongings: Each person needs their own policy.
  
• Floods and earthquakes: Typically not included and may require separate coverage.
  
• High-value items: May need special add-ons for expensive jewelry or gear.
  

Looking this up together can be a practical financial learning moment.

Driving Means Learning About Auto Insurance

If your teen is driving, they’re already involved in one of the most expensive areas of insurance. This is a great time to teach them how it works.

Ask them to contribute to the premium, even if it’s just a small amount. It builds responsibility and helps them see the real cost of protecting themselves and others. Review these important terms together:

• Premium
  The amount paid monthly or annually to keep the insurance active.
  
• Deductible
  The amount they’ll need to pay out of pocket before insurance pays the rest.
  
• Liability Coverage
  Pays for damage or injury they cause to other people or property.
  
• Collision Coverage
  Covers repairs to their own car after an accident, no matter who is at fault.
  
• Comprehensive Coverage
  Covers non-collision events like theft, vandalism, or natural disasters.
  
• Uninsured or Underinsured Motorist Coverage
  Protects them if the other driver doesn’t have enough insurance to cover the damage.
  

Walking through your family’s auto policy with your teen helps make insurance feel real and personal.

A Life Insurance Policy That Teaches a Bigger Lesson

Most people don’t think about life insurance for a child or teen, but a small policy can become a long-term teaching tool. The point isn’t the payout — it’s the message.

Here’s why it’s worth considering:

• It’s Very Affordable
  The younger and healthier your child is, the cheaper the premium will be. These rates are often locked in for life.
  
• It Protects Future Insurability
  If your child develops a health condition later, they may struggle to get coverage. A policy now gives them a strong head start.
  
• It Sends a Powerful Message
  You’re showing your child that you believe in preparing for the future and protecting the people and things that matter.
  
• It’s a Tool for Future Teaching
  When they’re older, you can hand it over and say, “We started this for you because we believe insurance is part of financial success. Now it’s yours to continue.”
  

You’re not just buying a policy. You’re giving them a lesson in planning and responsibility.

The Best Analogy: Think Umbrella

Insurance is like carrying an umbrella. You don’t bring it because you know it will rain. You bring it because it might. When the unexpected happens, like a cracked screen, a fender bender, or a burst pipe, you’re thankful you planned ahead.

That’s how we want our kids to think about insurance. Not as something scary or unnecessary, but as a smart way to protect what matters.

Make It a Family Conversation

Here’s your challenge for this month:

• Ask your child what in their life is insured… and what isn’t.
  
• Look up the cost of a renters policy or a phone protection plan together.
  
• Walk through your car or homeowners policy with them. Use real numbers.
  
• Keep the conversation simple and connected to their world.
  

These moments help your child see that protection is part of being smart with money. One step at a time, they’ll build the mindset they need to handle what life throws at them.