The following is a guest post from Crystal at Budgeting in the Fun Stuff. Her blog aims to cover paying for your necessities, saving for your future, and all the fun stuff in between.
This post at Yahoo Finance listed 15 Insurance Policies You Don’t Need. The following is their list of policies, a quick summary of their explanations, and my personal point of view:
1. Private Mortgage Insurance: Increase your home equity to at least 20% so you don’t have to have this policy.
I am a big believer of buying a home you can afford and putting at least 20% down, but if you didn’t, you will need this policy. No choice is no choice…
2. Extended Warranties: Unless you are purchasing a big, expensive electronic, don’t worry about this.
I personally never buy extended warranties but there are tons of people who swear by them. Check out your credit card benefits since many have extended warranty policies for electronics in some shape if you use the card for the purchase. For example, our Discover More card will double the extended warranty of an electronic up to one additional year.
3. Automobile Collision – If you are driving an old, paid off car, you should cancel this part of your auto insurance policy.
I don’t carry a collision policy on my car, but that is slightly stressful to think about. My car is only worth about $4000, so I figure that I have a good shot of being fine until it’s time for me to move on to something better. So far, so good and I’m keeping my fingers crossed.
4. Rental Car Insurance – You’ll spend more than you’ll probably ever use.
Yes, but it is nice to have when you need it. My husband had the rental policy on his insurance when he got into 2 different major accidents in college, so we’ve already made our money back even if we never use it again. He has this policy and I don’t. Our Geico plan doesn’t allow rental car coverage unless you have collision coverage as well.
5. Car Rental Damage Insurance – Many auto insurance policies already cover this.
Remember to check your credit card benefits too. According to our Discover Card “Your Discover Card comes with a Car Rental Insurance Plan that provides $25,000 of secondary collision damage insurance when you rent a car using your Discover Card and decline coverage offered by the rental agency.” Woot!
6. Flight Insurance – This is completely unnecessary.
I’d have to agree. Have any of you ever bought this?
7. Water Line Coverage – You’ll probably never need it.
I didn’t even know this existed. I’m choosing to continue to bask in my ignorance.
8. Life Insurance for Children – Statistically, most kids don’t die. They also don’t leave heirs. Put the money towards an educational fund or IRA instead.
I agree that kids don’t have heirs and it’s probably unnecessary, but I would increase my emergency fund to include enough for horrendous expenses. If any of you carry insurance policies on your children, could you help fill in my blanks? Why did you choose to get this policy?
9. Flood Insurance – Unless you live in a flood plain or a place that has a history of water problems, you won’t need this.
Well, I live right outside of Houston, TX, so I need this policy. Thankfully, we haven’t needed it yet, but 2 of our friends have…
10. Credit Card Insurance – Don’t carry credit card debt, and you won’t need this policy.
I agree. No credit card debt, no need for credit card insurance.
11. Credit Card Loss Insurance – Since your loss is limited to $50 or less, this is unnecessary.
This is also true. My credit card was left (read- I totally forgot about it at the register) at an out-of-state restaurant before and it took one 3 minute phone conversation to have it marked as lost and 3 days to get the new card in the mail.
12. Mortgage Life Insurance – Since a life insurance policy could be used to pay off your house and for other bills too, it would be a better idea.
I agree 100%. Why have a billion specific policies rather than one cover-all?
13. Unemployment Insurance – An emergency fund would make this unnecessary.
Well, I partially agree. An emergency fund will cover you during unemployment, but you will be using your money instead of an insurance company’s money. My husband and I have stable enough jobs to feel secure with a solid emergency fund, but if we worked in a volatile field, I would look into this.
14. Disease Insurance – Good medical insurance will cover whatever ails you, so you don’t have to get a policy for each specific disease.
I hadn’t even heard of these policies either. My medical insurance covers all ailments, so I feel secure.
15. Accidental-Death Insurance – These policies are often fraught with stipulations that make them useless anyway.
Yes, these policies usually have a ton of if’s, and’s, or but’s. I wouldn’t usually buy one, but my job supplies me with a small accidental death policy anyway.
Did you see any policies on the list that you’d feel uncomfortable by skipping?