These Insurance Policies Are Not Worth Your Money
In a sense, insurance is the least enjoyable thing you can spend money on. You buy it with the hope that you never have to use it (and if you do use it, it will only get more expensive). On the other hand, insurance is satisfying because it gives you peace of mind. But not for all insurances.
You know you need health and car insurance, for example, but renter insurance is probably a good idea too. This is usually pretty cheap and covers more than you might think. It’s the same with homeowner insurance, and of course, most lenders require it anyway. If you have dependents, life insurance might be worth it .
So what about all other types of insurance? Which ones are complete robberies? MEL magazine asked Bill Ferguson , professor of finance, insurance and risk management at the University of Louisiana at Lafayette. Here are some that are almost never worth it:
- Burial Insurance : This is usually a major robbery and is considered predatory by many consumer groups. If you live long enough, you can actually pay more for insurance than the funeral costs are worth. As Ferguson explains, good life insurance policies usually include burial insurance.
- Auto Health Insurance: Covers your medical expenses if you are involved in a car accident, but as Ferguson points out, if you already have health insurance, you are insured, so there is no need to.
- Credit Life Insurance: This policy basically pays off the outstanding debt in the event of your death. According to the MEL, your life insurance probably already includes this, and again, if you outlive your policy, you will likely end up paying more than it even covers.
There are a couple worth adding to this list. Some privacy companies offer insurance against identity theft, which is probably not worth it, as most financial institutions will easily reimburse you for fraudulent purchases anyway. Cell phone insurance is also probably worth skipping because you usually pay more than you are insured (and, again, some credit cards do cover you ).
In some cases, travel insurance may be worth it , but it may not cover as much as you think. I bought it one day and then I had to change my trip to find out that it only covers changes due to emergencies. In addition, your own health and life insurance usually covers all health-related costs that travel insurance covers. When it comes to trip cancellation protection, your credit card may already include it as an advantage.