The fear of the inevitable sells insurance. You need peace of mind should a sudden illness, car accident, property damage, or untimely death occur and wreak havoc on your and your family’s savings. While you can’t predict the future, you can cover for these disasters using insurance. However, there are unnecessary policies you can live (or die) without. There are catastrophes you don’t need to insure against. In this article, we list down 10 policies that are not worth your money.
1. Mortgage Life Insurance
Mortgage life insurance refers to the policy that covers your mortgage payment in the event you die or become disabled. While it sounds like a good idea, it’s one of the policies you can live (or die) without. It may overlap with your existing premiums. If you have life insurance, your beneficiary can use the money for any expense, including paying off your mortgage.
2. Travel and Flight Coverage
Looking to buy travel insurance for your #travelgoals? Before spending a dime on a plan, make sure to go over your current health and life policies to see they cover travel-related accidents, injuries, and death. Travel insurance policies may require you to waste money to pay for something you already have. Flight insurance coverage is another worthless money burner. One, airline accidents are rare. And two, should you die from a crash, your life insurance policy can provide enough coverage.
3. Critical Illness Coverage
There are policies meant to provide coverage for specific severe illnesses, like cancer and heart disease, and other severe maladies. The thing is, you don’t know what’s life in store for you, rendering these policies expensive and unnecessary. Instead of trying to guess every possible disease you may get in the future, you’re better off getting good health or medical coverage policy. Your medical bills are covered regardless of the illness you get.
4. Accidental Death Coverage
This coverage pays a benefit to your family should you die in an accident. But unless it’s offered by your bank at an extremely low price and your everyday routine is accident prone, don’t get this policy. Death due to major catastrophes like car accidents, plane crashes, and fires are generally covered under policies, like life insurance. Additionally, they are likely to be difficult to collect due to several stipulations about what qualifies as an accident.
5. Life Insurance for Children
This policy aims to lock in affordable premiums at a young age and covers for the expenses should the kid dies. Sounds scary, doesn’t it? It also doesn’t make sense, since life insurance is designed to provide a safety net for your dependents or heirs. Children don’t have dependents and realistically speaking, they’re likely to grow up healthy. Instead of buying a plan, use the money for funding an education plan for your child or for funding your retirement account.
6. Pet Insurance
As much as you love your family dog so much, you shouldn’t be wasting money on pet insurance. Some plans only cover emergencies while others cover medications and routine check-ups that not worth insuring against.
7. Credit Card Coverage
Buying an insurance plan to cover for your credit card bill in the event you cannot pay it is nothing but a waste of money, time, and energy. Besides, any policy that guarantees you coverage should you go into debt tends to come with a catch. You’re better off avoiding running up on your cards in the first place. You’ll save on premiums and the interest on your debt.
8. Rental Car Insurance
Many auto insurance brokers offer an additional policy for the cost of car rentals and convince you that it’s useful if your car is involved in an accident. While it’s relatively inexpensive, you’re likely to lose more money in the long run than you will benefit. Car rental costs are low and you’re better off paying out of the pocket.
9. Extended Warranties
The word “insurance” isn’t in “extended warranty” but it’s considered as a type of insurance policy. Extended warranties are offered when you buy major appliances and electronics. Don’t get lured by the convincing sales pitch! Statistically speaking, they are rarely used and is likely to be unnecessary, especially if you purchase a reputable, branded product.
10. Unemployment Insurance
As its term suggests, this policy is designed to make minimum payments on your bills and expenses in the event you’re out of work. Insurance brokers will try to persuade you into thinking that it’s handy during a surprise layoff or when you’re living paycheck to paycheck. It is, but it’s unnecessary. A better plan is to save money today and build up an emergency fund. You won’t have to pay for the insurance premium, and if you’re never unemployed, you won’t spend anything at all. You can’t buy peace of mind but you can at least buy insurance. Make the right choice.
Author Bio: Carmina Natividad is one of the daytime writers for Insurance Advisernet NZ, one of the largest and most reliable general insurance brokers in New Zealand, providing high-quality risk management advice for business owners. She enjoys writing practical tips and tricks, making complex finance and business topics easier to digest.