Wednesday, September 11, 2019

Insurance policies most people don’t need

Insurance policies most people don’t need


We are compelled to take out insurance policies because we worry about what might happen in the future. We want peace of mind that if the worst should happen we will be financially protected. Insurance providers recognise this, and subsequently they offer a number of different insurance policies designed to appease our fears. However, many of these policies are simply not worth having.

The first of these is flight insurance which protects you in the event that you are involved in a plane crash. Statistically, you are highly unlikely to be involved in a plane crash as these types of incident are relatively rare, and, if you already have life insurance you should already be financially protected. Similarly, some insurers offer accidental-death insurance which covers you in the event that a major catastrophe should occur; which again is statistically unlikely and which would also fall within the remit of a standard life insurance policy.

There are a number of different car insurance policies that you can buy in addition to your standard motoring policy. Rental car insurance is designed to cover the cost of renting a car should yours be involved in an accident and is off the road whilst undergoing repairs. Rental insurance is usually quite cheap, but over a period of a number of years you are likely to spend far more than you will be reimbursed as the majority of people do not rent a car in these circumstances, and if they do it is relatively inexpensive. Car rental damage insurance is another policy that you may not need. Designed to cover your rental car against damage, you will probably find that your current car insurance policy also covers rental vehicles; check the small print.  Automobile collision insurance is often required by loan providers, and is designed to cover the cost of repairs should your vehicle be involved in an accident. However, if you have paid for your car in full, and have enough money put away to cover the cost of repairs this sort of policy may not be cost effective.

Most retailers offer extended warranties, and they are notorious for offering poor value for money. If you buy from a reputable brand you can be reasonably confident that your electrical appliance or electronic item will work as advertised, and statistics show that it is unlikely that you will need to make a claim on an extended warranty policy, particularly on smaller items such as radios and CD players.

Some insurance providers offer life insurance policies for children which is not the best idea as the purpose of life insurance is to provide a financial safety net for dependents and heirs, of which, of course, children do not have. The premiums that parents pay into life insurance policies for their children would be better spent on an education plan or similar policy.

If you are a homeowner there are a number of different types of insurance policy on offer in addition to standard home insurance. You can purchase flood insurance which is completely unnecessary unless you live in an area prone to regular flooding. Recently, water companies have started to sell policies that cover the repair of the water pipe that runs into your property from the street. If you live in a newer property you are highly unlikely to benefit from this type of policy.

Many of us have a credit card, and most of us have been offered credit card insurance by our lender. Again, insurance of this type, which pays out and covers your regular payments should you become unable to work is a waste of money; you are far better to avoid spending on credit cards at all, thus saving you money on interest payments. Many lenders also offer credit card loss insurance, which protects you should your card be lost or stolen and used fraudulently by someone else. However, in most countries your liability is limited if your card is stolen; some lenders will even foot the bill in its entirety.

Unemployment insurance often seems like a good idea as it pays your bills should you lose your job. However, it may be more sensible to save a regular amount each month and build up savings to be used if the worst happens. By doing this you don’t have the expense of paying for monthly premiums, and if you remain in continuous employment you will have built up a considerable nest egg for the future.

Disease insurance policies are available that cover individual illnesses such as heart disease and cancer. Rather than speculating about which disease you are most likely to contract, and taking out the appropriate cover, your money is better spent on a sound medical insurance policy that will cover the cost of your medical bills regardless of what illness you are dealing with.

Although many insurance policies offer essential cover, and are a sound investment, many more are unnecessary and offer poor value for money. In general, opt for policies that offer coverage for a broad range of events rather than specific types of accident and diseases. It pays to read the terms and conditions of any policy thoroughly in order to understand the level of cover you are being offered, and the associated costs.

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