Saving Cents: 11 Insurance Policies You Might Not Need

There are certain insurance policies that are a waste of your money, according to some financial experts. One of the most wasteful policies, the experts say, is standard life insurance on a child.

Life insurance is intended to provide for survivors in the event of a breadwinner’s death. Most kids are not breadwinners in the family. This kind of policy would be useful to pay for burial costs, but the odds your child will die are actually – thankfully—quite small.

Credit card insurance pays the credit card company in case you get laid off. Houston financial planning expert LaVera Prestage says the money then goes to your creditor, not to you. It would be smarter to insure yourself with a disability policy. Aflac is one company that sells them, but there are many others, Prestage said.

Credit life insurance pays your creditors in case you die. Experts say it’s better to insure your life with a big enough policy to leave your survivors adequate funds to pay off debts in the event of your death.

Mortgage life insurance pays your mortgage company in case you die. Again, it’s better to buy a policy that benefits your survivors, not the mortgage company.

“If you have all these separate policies that cover in the event that you die, and all these other people are paid, your family is still not provided for,” said Prestage.

Private mortgage insurance is required for homeowners who put down less than 20 percent on their home, but once you have paid for more than 20 percent of what your house costs, you should call your mortgage company and cancel the PMI policy.

Cancer insurance pays out if you get cancer, but nothing if you have another health issue. It’s better to have general health insurance that covers cancer and all other diseases and health problems, Prestage said.

Roadside assistance through your auto insurance company is a waste, because even though the policy is usually low-cost and covers towing and running out of gas, it counts as a claim on your insurance policy if you use it. And that could raise your rates..

Comprehensive and collision on a car that’s older can be a real waste of money. Often people buy this for their cars when they’re new and then forget they have the coverage once their cars age.

“This is the important thing. You have to review the coverage you have because it may be suitable right now and your needs may change,” Prestage said.

Rental car insurance is something that’s unnecessary, because it’s usually covered by your regular auto policy, in addition to your credit card.

Travel insurance is not necessary unless you are taking a cruise or your travel companion has health issues.

Extended warranties usually only cover your purchase during the first few years of its life, when it is least likely to fail or malfunction.

Via: KHOU.com