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Insurance policies are one of the few things people buy while hoping they never have to use them.For a small fee or “premium,” the policies protect us and our loved ones against damages or losses to our homes, cars, health and even our lives.
Some insurance policies are unnecessary, however, and may even be considered a complete waste of money since it is so unlikely that you will be able to collect on the policy. Take a look at the following types of insurance you don’t need.
Life Insurance for Children
Several companies market life insurance for children, although the most well-known is probably Gerber Life and their Grow Up Plan.
Life insurance is designed to take care of your dependents if you should pass on before they’re ready to take care of themselves, so there isn’t much need for children to have their own life insurance policy.
A typical child life insurance policy might cost about $3-4 per month for a $5,000 whole-life policy. After paying on this policy for 20 years, the guaranteed cash value wouldn’t quite equate to what you paid in premiums.
Airlines will offer flight insurance when you buy your tickets. It offers a cash payout to your beneficiary if there is a plane accident that results in your untimely death.
Most people feel flight insurance is a waste of money because aeroplanes rarely get into accidents and crash, and you should have life insurance to cover your dependents in the event you die before they are able to take care of themselves.
Credit Card Insurance
Most credit card companies encourage cardholders to sign up for their credit card insurance programs —the cost is equal to a percentage of your monthly credit card balance. In the event of the cardholder’s death or incapacitation, the insurance will pay some or all of your credit card balance.
However, many claims based on disabilities are denied if they are considered a pre-existing condition or because the credit card company doesn’t consider the particular disability the cardholder as totally disabled.
If you should die, and the credit card debt was in your name only — no one else is going to be responsible for your credit card balance.
Pet Health Insurance
Health insurance for Fido or Fluffy seems like a great idea. If you’ve ever taken a pet to the veterinarian, you know how expensive it can be!
The problem with pet insurance is the number of exclusions or deductibles and limitations the policies have, which means you end up paying the monthly premium plus the out-of-pocket expenses which are not covered by the policy.
Instead of paying for monthly pet insurance premiums, it’s recommended that you budget about $300-500 per year for routine health care for your pet.
Cell Phone Insurance
For a monthly premium of $4 to $8 per month and a deductible ranging between $25 for basic phones and $200 for smartphones, cell phone insurance will replace your phone if it is broken, lost or stolen.
If you have your phone for a year with a cell phone insurance policy, you would have paid about $48 to $96 in premiums. You will then need to pay the $25 or $200 deductible and probably receive a refurbished phone as a replacement.
You can purchase refurbished phones for less than the insurance policy and deductible (from eBay or even from your cell phone provider) or just hang on to your old phone as a backup.
Rental Car Insurance
Before you agree to pay extra for car insurance when you rent a car, check your own auto insurance policy, as many already include coverage.
On the other hand, if you rent cars infrequently and discover the car rental damage fee is lower than what you pay per year to cover rental car damages on your insurance policy— cancel the rental coverage on your policy and simply pay the fee when you rent a car.
Also, your credit card may already offer rental car insurance.