Insurance is a financial product that provides protection against unexpected losses or expenses, such as accidents, illness, or property damage, by pooling risks among many policyholders and reimbursing individuals when covered events occur. In exchange for a policy premium (a regular payment), an insurance company agrees to compensate the insured party for losses outlined in the insurance contract. Insurance is important for young adults because life is unpredictable and even healthy people can experience accidents, illness, or other emergencies that could result in significant expenses. Having insurance can protect savings, help manage financial risks, and prevent debt due to unforeseen costs. Premiums are usually lower for younger and healthier individuals, making it more affordable to start coverage early. Young adults should consider the following key types of insurance: Health insurance: Covers medical care, hospital stays, and prescriptions, offering crucial protection against high medical costs. Renters insurance: Protects personal belongings against theft or damage, and provides liability coverage for accidents in rented residences. Auto insurance: Legally required if owning or driving a vehicle, covering damages from accidents, theft, or injuries. Term life insurance: Provides a death benefit for a set period, ensuring financial support for dependents or covering debts—often quite affordable for young adults. Additional insurance (if relevant): Disability insurance (income protection if unable to work), and, for those with high-value possessions, possibly personal property insurance. Starting with these core policies can help establish a safer financial foundation and avoid common pitfalls in early adulthood.