May 16, 2011

Guest Post: Insurance that you might not know about

Insurance can be confusing. Sure, you could be on the safe side, and get every type of insurance possible. But the cost of premiums would outweigh any protection that you receive.  Here are some necessary types of insurance and some that you would be wise to avoid.

Home insurance is almost always a good idea. Yes, if you have a mortgage, the lender will require you to have your house insured in case of fire, robbery or natural disaster. People who have their mortgage paid off should probably retain this insurance because an unexpected fire damage or even storm damage can lead to repairs that most people are unable to afford.


Renters insurance protects valuable things on this inside of your apartment, such as your belongings. Because insurance is not always required to rent an apartment, some people don’t bother to have this. However, if their belongings are destroyed, they will have no recourse to get them back.

Life insurance - Even if you do not have many possessions to worry about if you pass away, life insurance can still be a good idea. The cost of a funeral and burial can be steep, meaning that family members may be stuck with the bill if you happen to pass away. Funeral costs is not the first thing that people think of when an untimely death occurs, but life insurance is very cheap for younger people and it can more than cover this type of expense.

Depending on the type and size of your business, liability insurance can be a necessity. If you have your own business or are an independent contractor, you probably need business insurance for liability. If someone is injured as a result of a service or product that you provided, the insurance will cover the cost to reimburse them.

Kinds of insurance you probably don’t need

Identity theft insurance - It might take a little leg work to undo the damage done when someone steals your identity, but most problems can be cleared up in several days. There is really no need to get identity theft insurance. 

Collision insurance on old cars - In most states, drivers need to have liability insurance in order to drive.  However, once you have paid off the loan on your car, you no longer need to have collision insurance.  This means that if you are in an accident, you will not receive any money to fix your car.  If you are liable for the accident and must pay the other driver, the insurance will pay for you.

Specialty health insurance (cancer or disability insurance) - Unless you have a high genetic risk for a certain type of disease, this type of insurance is not necessary.  A good regular health insurance plan will cover these types of illnesses, as long as they are not pre-existing conditions.  New healthcare laws in the US will soon make it illegal for insurers to deny coverage based on most pre-existing conditions. This will truly make cancer insurance obsolete.  

Travel insurance - You can purchase different types of travel insurance. Some insurance simply covers you if your vacation is canceled.  These policies are hardly ever worth considering, unless you are overly concerned about traveling during hurricane season in the Caribbean. Even then, the cost of rearranging your flights and hotel may be less than or equal to your insurance premium,  If you are traveling far abroad, travel health insurance and air evacuation insurance may be a good idea. At the very least, you can buy a cheap insurance plan that covers you if you need to be evacuated by air.

Dental insurance - Dental insurance is one of the more difficult forms of insurance to come to a decision about. Dental services are not always covered under health insurance plans. Dental procedures can be quite expensive, making it difficult to pay out of pocket. However, the odd cavity and check up isn’t going to break the bank, making it possible to consider foregoing any sort of dental coverage and opting to try to convince your health insurance to pay for anything too serious. 

Author: Mark Rodgers has been in personal finance for 4 years. He advises people where to find online insurance quotes and helps businesses how to utilize QR codes.

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