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Insurance is a great way to protect yourself and the family. Not everything has to be insured, though. There are certain insurance policies that just might not be necessary. Before you get swindled into one of these types of policies, here?s what you should reconsider purchasing.
1. Accidental death and dismemberment insurance - This is something that can be covered by a term life insurance policy or a long-term disability policy. There?s probably little need to purchase a separate policy like this. If you still think you really need it, be sure to read all of the fine print and weigh the cost of the policy versus the benefits before you decide to buy.
2. Cell phone insurance - Purchasing a good case for your phone is really the best insurance you can buy to protect your phone. If you are still concerned, then you could always put the money you would have been spending on the monthly insurance policy into a savings account. If you somehow manage to find yourself in need of purchasing a new phone, you?ll have it in savings.
3. Children?s life insurance policies - It?s tempting to get life insurance for your child, but really the chances of a child dying are pretty slim and if it does happen you?ll probably be able to afford the cost of services.
A child isn?t going to have any bills to pay, so really a life insurance policy for a child is strictly for the cost of funeral. Oftentimes funeral homes will offer discounts for children?s funerals if you have a financial need.
4. Mortgage life insurance - Purchasing a separate insurance to pay off your mortgage in case you should die might not be the best idea. A term life insurance policy can cover that and other expenses as well, for a lower monthly cost to you. Look into a term life insurance policy instead of mortgage life insurance.
5. Short-term disability insurance - If you have enough money in your savings account to float you for 3-6 months, then having a short-term disability insurance policy is probably not a necessity for you. Use the money you would pay on a policy like that and add it to your savings account instead.
6. Extended warranties - In most cases the warranty that a manufacturer offers with the item you?re purchasing is more than enough, and you won?t need to buy an extended warranty plan. Putting the money you would spend on the extended warranty into savings and allowing it to accrue interest will be more than enough to cover you in the event something should go wrong and you need to pay for an item to be fixed.
As with anything, you?ll need to look at your individual circumstances to see if this is an expense that makes sense for you to make on any of these different types of policies. You likely are not going to need them, but you certainly wouldn?t want to say no if you get it for free.
If you?re unsure if your lifestyle might mean it makes sense for you to purchase any of these policies, then you might want to speak with a financial planner. He or she can help you determine if it?s something you can use your savings for, or whether these types of policies would be in your best interest.