Jun 27, 2011

Seven Insurance Policies that are a Waste of Money

There are certain types of insurance in life that we can’t live without and which you would be foolish to go without. Health insurance, car insurance, even life insurance all have their place in your financial planning, and though expensive, are important to have if the worst should happen. However there are now so many different kinds of insurance out there that it seems as if insurance companies are trying to cover every second of your day – and make you pay for the privilege. Here are seven examples of insurance that in all likelihood, you don’t really need:

Extended Warranties: The biggest con of all, if you buy a product you are entitled to expect that it will work for a decent length of time. In Europe for example, extended warranties are unnecessary because the courts would argue that you should expect a product to last four to five years minimum anyway. And if you’re so convinced it will collapse the day after the manufacturer’s warranty expires, save a bit of money every month into a bank account. That way if it doesn't, you’ve got some extra spending money!

Mortgage Life Insurance: Designed to leave your family free of the worry of paying the mortgage if you die, you’re far better investing in a life insurance policy that would be big enough to both pay the mortgage and leave your family with a lump sum at the same time. Save your money and do some research on those life insurance quotes.

Hire Car Insurance: If you own a car but need to rent for the day, check your car insurance policy. Chances are you’re covered for rental cars too.

Children’s Life Insurance: Life insurance is supposed to provide for dependents in the worst-case scenario of death. Your children will not have any dependents. Put the money towards their college education or getting their first home, a complete waste of money.

Flood Insurance: The only time you should buy Flood Insurance is if you live on a flood plain where flood insurance is required. Anywhere else and the chances of it happening are so remote it is probably not worth spending your money on.

Credit Card Insurance: Most people get this because they believe it will mean their debt is paid if they lose their job or get into an unforeseen circumstance where they can’t make their repayments. Unfortunately this isn’t true. Instead the credit card company will simply pay off the bare minimum every month, whilst the main part of the debt stays there slowly accumulating interest. A far better use of your money would be to spend it on reducing the actual credit card debt.

Unemployment Insurance: Basically unemployment insurance, unlike unemployment compensation, is a private policy that would pay the minimum payments of all your bills if you were to lose your job. But in reality, when you read the small-print unemployment insurance is really only useful for self-employed workers.

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