15 Insurance Policies You Don’t Need

 

*Please note – This article is not a recommendation that you should be without these specific insurance policies, we are merely pointing out some insurance that you could go without if you want to save more money on a monthly basis. Please contact your insurance provider and stay informed with the correct policies so you can make the right decision to suit your particular lifestyle and needs.*

In many areas, having a particular type of insurance is mandatory – for example, you aren’t allowed to drive unless your car is insured. This is so that you are covered in case of an accident and you can go simply go through insurance instead of paying collision damage out of your own pocket. This also prevents getting sued personally for any medical costs that the other driver may need due to the collision. Since you have insurance, it’ll just go through the insurance companies.

There are many different types of insurance to protect you from potential catastrophes which could cost you the shirt off your back (and then some!). Insurance is so profitable because no one knows what the future holds and many people like to be safe instead of sorry. However, there is a point where you are just throwing your money away because of fear of the unknown. Here are 15 policies that may not be worth insuring against.

1)      Disease/Cancer Insurance

Disease Insurance is an insurance specifically to benefit you if you encounter a specific illness, such as cancer (as a result one of the most common disease insurance is cancer insurance). Instead of trying to pinpoint every possible disease you may get and pay for them separately, why not just get good overall medical coverage instead? This way you will be covered for a wide variety of problems, not just one specific illness. For more information, check out 8 Tips to Help Pay You Pay Your Medical Bills.

2)      Private Mortgage Insurance

Private Mortgage Insurance, otherwise known as PMI is obligatory if you make a down payment of less than 20% on your home. This insurance is supposed to protect the lender against loss since such a small down payment made by the borrower. This insurance has no benefit for the borrower so it would be a good idea to pay down 20% or more of the home’s value in the down payment to avoid paying this extra insurance and save your money each month instead. If you can’t afford to put down 20% down, you might want to consider taking out a loan from a separate bank for the added down payment and paying that off so that you can total 20% of the home’s value and not pay this private mortgage insurance.

3)      Flood Insurance

Flood insurance essentially protects your items and homes in case of a flood, however, unless you live in an area that frequently floods, this is an insurance you can generally opt out of. Furthermore, even if a flood does occur, the majority of the time it will only affect the basement of your house so it’s not like you won’t have anywhere to live.

4)      Credit Card Loss Insurance

When you get a credit card, many credit card companies try to get you to sign up for credit card loss insurance but the reality is, this is something you can do without. As soon as you find out you have lost your credit card, simply call the credit card company and have them cancel your card immediately. Then ask if there have been any transactions (since you lost your card) and if so, many times you can dispute these unauthorized transactions and get them removed. Some credit card companies will charge only $50 to replace the card; many of them will do it for free so having this insurance isn’t really necessary.

5)      Credit Card Insurance

Instead of paying extra money each month to have your minimum payments on your credit cards taken care of should something happen to your income, it would be a far better idea to not have so much debt racked up in the first place. If you do have credit card debt, than it would be a better idea to use that extra money each month to pay down your total debts instead of paying for this insurance. For more information, check out 10 Steps to Paying Off Credit Card Debt. It may also be a good idea to have a 6 Month Emergency Fund that will help you make your minimum payments, this way you know you will be covered for sure.

6)      Life Insurance For Children

Life insurance is designed to provide money to your heirs and/or dependents once you pass away, but since children don’t have any heirs or dependents anyway (nor have they accumulated any assets of their own which to protect and pass down), this insurance is typically unnecessary. It would be a better idea to save for their education. For more information, please see Saving for Your Child’s Education and How to Teach Your Kids About Money.

7)      Flight Insurance

Purchasing flight insurance may not be the best idea because flight accidents are actually very rare. In fact, the chances of you dying on a plane are just one in 7 million. In fact, plane crash accidents only accounts for 100 deaths per year. To put this into perspective, close to 46,000 people die each year from vehicle collisions. By taking a look at these statistics, flight insurance is really not necessary. Furthermore, if you have life insurance, it probably covers flight anyway.

8)      Car Rental Insurance

Getting car rental insurance may sound like a good idea, but the cost of a rental car is relatively cheap and not really worth insuring against. You will most likely spend far more than you will benefit from this.

9)      Car Rental Damage Insurance

As for getting car rental damage insurance, most auto insurance policies cover this already (as well as many credit cards) so there is no point in paying for this twice. Make sure to check your insurance policy before getting car rental damage insurance since you may already be covered.

10)   Accidental Death Insurance

Accidents are not as likely as simply dying of old age or a health condition. Furthermore, many life insurances already cover accident related death so it would be a better idea to get an all-inclusive life insurance policy if you are concerned about accidental death instead.

11)   Identity Theft Insurance

Instead of paying money each month for identity theft insurance, it might be a better idea to check your credit bureau every 3 months and make sure there are no unauthorized loans etc. Checking your credit this often will also help if you want to Build Your Credit. Also make sure you check your bank and credit card balances often (at least twice a month) to ensure that there have been no unauthorized transactions.

12)   Vehicle Collision Insurance

Vehicle Collision insurance can be useful for some, but if you have quite an old vehicle or are currently covered under any extended warranties it may not be worth it in the long run. If your car is already paid off, getting vehicle collision insurance may be unnecessary since cars depreciate so quickly anyway. This is especially true if you were already planning to get a new car anyway; it might make more sense to save the money on vehicle collision insurance and put this in your car fund instead.

13)   Mortgage Life Insurance

Mortgage life insurance pays for your mortgage in the event of your death; however, if you get a good term-life policy instead, your mortgage will already be covered along with many other bills that your loved ones will have to take care of. A good idea would be to look for a good life insurance policy that would cover multiple expenses instead of getting mortgage life insurance. For more information on the cost of owning your own home, check out 4 Overlooked Home Ownership Costs.

14)   Extended Warranties

Instead of paying for extended warranties for brand new items, you might be better off to do a little bit of research on the items before you get them. Go online, read some reviews and check if the item you want frequently breaks down or needs repairs. If you feel more comfortable with an extended warranty, consider only buying it on items over $5000, or on items that you absolutely need in your life such as a laptop.

15)   Water Line Coverage

Water line coverage insurance covers the repair of water lines that run from the street to your home. However, if you live in a newer home, you will probably never encounter this. Even if you happen to live in an older home and it does happen, it will probably only be a couple thousand dollars or less. Don’t bother with paying for this insurance every month, instead just put the money towards your emergency fund.