Section 2 of 7

Risk Management & Insurance

Insurance is how you protect everything you're working to build. Health and auto are the obvious ones, but this section covers the often-overlooked protections that can make or break a young adult's financial plan when something goes wrong.

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Skyler Fleming
Financial Planner, Candidate for CFP® Certification  ·  Helping young adults build financial foundations that actually last
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Term Life Insurance Needs Calculator

Figure out how much coverage you actually need, not just a rough guess.

Term life insurance has one job: replace your income if you die and someone depends on it. The question isn't whether to get it, if anyone relies on your income, you need it. The question is how much. This calculator uses a straightforward framework to add up what your beneficiaries would actually need. After calculating your coverage needs, make sure your beneficiary designations are up to date.

Do you need it? If a spouse, child, or anyone else depends on your income to live, the answer is yes. If you're single with no dependents and no co-signed debt, you likely don't need it yet, but the younger and healthier you are when you buy it, the cheaper it is. Locking in a rate in your 20s can save thousands over the life of the policy.
Step 1, One-Time Expenses Your Beneficiaries Would Face
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Step 2, Ongoing Income Replacement
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Years tip: A common approach is to cover until your youngest child is independent (~22 years old) or until your spouse reaches retirement age. Your income replacement amount is calculated as a lump sum your beneficiary could invest and draw from, the rate above is what they'd earn on that investment.
Step 3, Existing Coverage
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Coverage to Purchase
Recommended Coverage
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Coverage recommendation will appear once you fill in your information.
Keep it simple: Term life is the right choice for almost every young adult. It's straightforward, you pay for coverage for a set number of years, your beneficiaries get the payout tax-free if something happens, and you're not paying for investment features you don't need. Avoid whole life policies pitched as "investments", the returns are poor and the fees are high.
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Disability Insurance Estimator

Your most likely insurance claim isn't death, it's disability.

You are statistically more likely to experience a disabling injury or illness than to die during your working years. Disability insurance replaces a portion of your income if you can't work. Most employer plans provide some coverage, but it's often not enough, and it doesn't follow you if you leave the job.

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Enter your income and existing coverage to see your gap.
Own Occupation vs. Any Occupation, This Matters
✅ Own Occupation (Get This)
Benefits pay out if you can't perform your specific job. If you're a nurse who injures her hands, you receive benefits, even if you could technically work a desk job. This is the coverage that actually protects your career.
⚠️ Any Occupation (Avoid If Possible)
Benefits only pay if you can't do any job at all, including a minimum-wage job unrelated to your field. This sets an extremely high bar for claims and may leave you without coverage when you need it most.
Elimination period tip: Your elimination period is how long you wait before benefits begin. A 90-day elimination period pairs well with a 3-month emergency fund, your savings bridge the gap until coverage kicks in.
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Health Insurance Plan Comparison

Compare plans by what you'll actually pay, not just the premium.

The lowest premium is rarely the best deal. A low-premium, high-deductible plan can cost you far more in a year where you actually need care. Compare two plans below across three healthcare scenarios to find your real break-even point.

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Plan B
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Key terms: Your deductible is what you pay before insurance kicks in. Your out-of-pocket maximum is the most you'll ever pay in one year, after that, insurance covers 100%. The premium is your monthly cost regardless of whether you use the plan.
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HSA Triple-Tax Advantage Calculator

The most underrated account available to young adults.

A Health Savings Account (HSA) is only available if you have a qualifying health insurance plan, but when you do, it's arguably the best account you can use. Contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. That's three tax benefits on the same money. After age 65, it functions like a traditional IRA for any purpose. See the tax planning section for how stacking an HSA with other accounts can significantly reduce your tax bill.

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Pre-Tax Contributions
Money goes in before income tax, reduces your taxable income today
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Tax-Free Growth
Investments inside the HSA grow completely tax-free, no capital gains tax
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Tax-Free Withdrawals
Withdrawals for qualified medical expenses are completely tax-free, at any age
Contribution limits: The IRS sets annual HSA contribution limits, and they adjust each year. Before entering your contribution amount, check the current limits at the IRS website. View current HSA limits on IRS.gov →
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Power move: If you can afford to pay your medical expenses out of pocket today, let your HSA grow invested. Keep your receipts, there's no time limit on reimbursing yourself for past qualified expenses. This lets your HSA compound tax-free for decades and then pay yourself back tax-free later.

Frequently Asked Questions

Do I really need life insurance in my 20s? +

If no one depends on your income right now, life insurance isn't urgent. But if a partner, kid, or family member would be financially stranded without you, it's not optional. Term life is the right product for most young adults — you buy coverage for 20 or 30 years, and the premiums are cheapest when you're young and healthy. Waiting until you actually need it means paying significantly more for the same coverage.

What is disability insurance and why is it important? +

Disability insurance pays you a portion of your income — typically around 60% — if an illness or injury keeps you from working. Most people think of it as a retirement issue, but you're more likely to face a disabling condition during your working years than most people assume. Your employer probably offers some coverage, but it's worth reading the fine print: group plans often have gaps and disappear when you leave the job. A personal policy fills that.

What is an HSA and how does it work? +

An HSA is only available if you're on a qualifying high-deductible health plan — but if you are, it's arguably the best savings account available. Money goes in pre-tax, grows tax-free, and comes out tax-free for medical expenses. Three tax benefits on the same dollars, which is genuinely unusual. After 65 it works like a regular IRA for any purpose. If you're young and relatively healthy, pairing a high-deductible plan with a maxed HSA often beats a traditional plan on total annual cost.

How do I know which health insurance plan is right for me? +

The lowest premium isn't automatically the best deal — that's the trap a lot of people fall into. A high-deductible plan looks cheap until you actually need care; a low-deductible plan looks expensive until you price out a bad year. The answer depends entirely on how much healthcare you typically use. The plan comparison tool on this page lets you plug in three scenarios — low, medium, and high usage — and see which plan wins on total annual cost.