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How To Use Your Insurance To Help Your Adult Children

However, thanks to a recent change in the law, you can help them get the coverage they need. Under the Affordable Care Act, young adults up to age 26 can remain on a parent's health insurance plan. The provision applies regardless of a young adult's residence, marital status or income.

5. Let your adult child stay on your auto insurance policy

Auto insurance is a major expense for young adults, and as long as your child is still living at home, he or she probably can remain on your policy.

Insurance rates for young drivers normally are high because of their greater risk for having auto accidents. It's usually cheaper to keep a teen on the family policy rather than putting him on his own policy.

Shop around to determine which alternative is less expensive.

Marty Draper, head of personal lines for Farmers Insurance, reminds you to consider your own liability before adding a child's name to an auto insurance policy. Depending on the laws in your state as well as how the policy is set up, everyone named on the policy potentially could be liable for damages if your child causes an accident and is sued.

"Parents and the adult child need to work closely with their agent to understand the specifics of their jurisdiction and how their policy works," says Draper. For example, parents might be on the hook for damages if their child has lower limits on the policy than they do.

"The key for consumers is if you are going to add a kid to your policy, even an adult child, you need to make sure you have the proper [liability] limits," says Edie Mermelstein, a Southern California attorney who handles insurance and consumer issues.

6. Purchase long-term care insurance

Feldman says if you purchase long-term care (LTC) insurance for yourself, it will provide peace of mind for your children. It also may save them money.

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