Insurance You Don’t Need

Insurance is usually a good idea. It prevents you from having to spend huge sums of cash by simply paying a small amount every month. Sure, things like car insurance and medical insurance are a must, but what about all of those other kinds of insurance that you’re offered? Here at PaydayLoansCashAdvance, we care about your hard-earned money and we don’t want you to have to spend it on unnecessary insurance policies that will never give you a return on your investment. Here are the top 10 types of insurance policies that you are better off saying no to.

Service Contracts

You will be offered these every time you buy a car, tools or high-priced electronics item. What they do is extend the manufacturer’s warranty, giving you peace of mind for even longer. The only problem is that you will rarely require these services. Even if something does break, it is often cheaper to fix it than the price of these service plans. There are also so many limitations and exclusions, that even if you do try to use it you may not be able to. Not to mention, if you use your credit card for the purchase, you may have a built-in extended warranty without even realizing it.

Private Mortgage Insurance

This is not always a bad insurance, but it is definitely one you need to be aware of. When you first get your mortgage you may be required to get this insurance because it will help cover the mortgage lender if you default on your payments. However, once your balance is down to 80% of your home’s value this becomes an unnecessary insurance. The problem is that most banks don’t let you know about this rule and you end up paying on it for many more years than you need to.

Additional Riders

You may think that you need a separate insurance policy for all of your vehicles, but that is not the case. In fact, most additional vehicles that you own besides your car (think boat or RV) are usually covered under your homeowner’s insurance. Look into what your policy really covers and you may be surprised.

Flight Insurance

This is the epitome of bad insurance. You will be asked to purchase this when you book a flight, just in case you have to cancel in case of an emergency. First off, it is not effective if you simply change your mind, which is the reason most flights are canceled anyway. It has to be a documented, legitimate emergency for the insurance to even kick in. Secondly, if you purchase your flight using a credit card or debit card, your purchase is probably already covered anyway. In fact, most credit cards have $100,000 of built-in insurance for this type of purchase.

Credit Insurance

If you carry a balance on your credit cards from month to month, you may be tempted to purchase credit insurance. Credit insurance offers you protection in the case of death or a seriously debilitating condition. Your debts will be forgiven and you will not leave your loved ones with the burden of your debt. However, if you already have a life insurance policy, the chances are that your beneficiaries will receive more than enough to cover your debts.

Mortgage Insurance

This insurance may be tempting because you do not want to leave your kids with the burden of having to pay on your mortgage after you pass away. Once again, you should simply carry a life insurance policy that will pay enough to cover all of your debts, including your mortgage, so you don’t have to worry about it.

Life Insurance for Children

Speaking of life insurance, if you have kids, you have probably received many offers to take out life insurance policies on them. This is a bad insurance choice for many reasons. First, the chances of your children actually dying are very slim. Second, they are children so they do not have any debts or dependents to take care of. The policy is really just to pay for funeral expenses. If you are really worried about it, put some money away in a savings account instead.

Cancer Insurance

This type of supplemental insurance may seem like a good investment since the occurrences of cancer seem to be on the rise. What makes this a bad insurance decision is that there are so many exclusions and conditions that you will find that even if you do get cancer you won’t really get your money back. Many cancer insurances cover hospital stays but will not pay for pricey chemotherapy and radiations treatments. Additionally, many policies exclude certain types of cancers.

Short-term Medical Insurance

Whether you quit, get fired, or get laid-off, you will be offered to extend your medical insurance when you leave. In fact, it is a law that you have the option of doing so for up to a year and a half after you leave. While this may seem like a great option, the caveat is that you only get to keep the coverage if you pay the full price of it yourself. If you recently lost your job this is just not practical. Plus, the chance that you will actually need treatment that exceeds the expense of it is very slim. Unless you have medical issues, you are probably better off skipping this insurance.

Cash-value Life Insurance

When considering all of the options for life insurance, this one may seem very tempting because it offers you benefits when you die plus it can be cashed-out in case of an emergency. The problem with this option is that you have to pay on it for over five years to even see a positive return on it. Even then, you will find that you have to pay a ridiculous amount on fees and commissions.

When trying to decide between different insurance policies, you need to use some common sense while comparing the numbers. If you seem to be paying more into it than you can ever expect to receive back, it is a bad insurance policy. There are better ways to invest your money that are guaranteed to give you a return.

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