Have you ever stopped to think about how many types of insurance are available? You can get coverage for virtually any situation you can envision. Some forms of insurance are valuable and necessary. Others seem to be simply another way to spend money that could be better spent on the necessities of everyday living. As a responsible person, you’re determined to protect your family, but with so many insurance policy options it’s hard to pin down what’s essential and what’s superfluous. With any type of insurance policy, you’re paying a small amount up front to make sure you’re protected in case a problem arises. If it does, your insurance kicks in and you breathe a sigh of relief. However, in a lot of cases you’d probably be further ahead putting your money in a savings account. Following are seven insurance policies you shouldn’t waste money on.
Not to be confused with unemployment compensation, which is a government program that pays a portion of a person’s regular earnings when they are out of work, unemployment insurance is a private insurance policy you could take out that would make minimum payments on your bills while you’re not working. On the surface that may seem like a reasonable choice, but unless you’re self-employed, it’s more than likely a redundant policy.
Credit Card Insurance
Many people who take out credit card insurance believe the policy will protect them by paying off their credit debt entirely in the event they’re unable to meet their financial obligations. That isn’t true, and unfortunately a lot of people have found that out the hard way. Credit card insurance will generally pay only a portion of your monthly bill, usually the minimum amount that is due. The bulk of the debt remains on the books as interest builds, and there are a lot of limitations on exactly what the insurance covers and what it doesn’t. You may be far better off to put the money for the credit card insurance premium towards paying down your outstanding credit card debt.
Unless you actually live in a designated flood plain, where flood insurance is required, you will probably never need to be concerned about flooding. Of course there’s always the possibility of an unprecedented natural disaster, but chances are you’ll simply be spending money that could be used for something else.
Children’s Life Insurance
Since your child’s health and welfare are among your primary concerns, you want to make sure you supply them with everything they need. Life insurance isn’t among their needs, because a life insurance policy is designed to provide financial protection for an heir or dependents. In the case of a child, having an heir shouldn’t be a concern. Instead, put that money aside for their future education.
Rental Car Insurance
Paying for rental car insurance is usually a waste of money because your regular automobile insurance policy usually covers rental cars. Even if it doesn’t, or provides only minimum coverage, you will undoubtedly use a credit card for your rental car. In most cases your credit card company will provide rental car insurance for no additional charge.
Mortgage Life Insurance
This type of insurance is designed to pay off your mortgage in case you pass away. It would give your dependents the peace of mind of not having to worry about paying off the mortgage. In most cases you would be better off buying a term life insurance policy with a big enough payout to cover the mortgage and provide for your family’s future. Instead of making two payments that would essentially cover the same thing, consider paying a few dollars more a month on the term policy.
In the opinion of a lot of people, an extended warranty is nothing more than a complete waste of money. If you purchase a quality item in the first place, you can be relatively certain the warranty that’s included will be sufficient. If you’re truly concerned the DVD player or HDTV you purchased will give up the ghost immediately after the manufacturer’s warranty expires, you’d probably be better off if you put a little bit of money aside each month to cover the cost of repairing or replacing the items rather than relying on the extended warranty.