Insurance is a must in certain areas of life, but having too much makes us over insured and paying premiums that could better serve our savings account.
Most of us have four types of insurance: Health, Auto, Home, Life and Liability. These policies are necessary for obvious reasons, yet many other types of insurance may help us find comfort knowing our purchases are insured but in many cases not worth the cost. Let’s explore some of the policies.
Mortgage Life Insurance – this insurance pays off your mortgage in the event of your death. This type of insurance is completely unnecessary if you have a decent life insurance policy. Also, a life insurance policy can cover the mortgage and any other outstanding debt.
Auto Collision – is designed to cover repair cost if you are involved in an accident and is necessary if you have a loan on the car. However, if your vehicle is paid off this becomes optional; do the math, cars depreciate quickly, and an older car may not be worth the monthly premiums.
Extended Warranties – these are available on many purchases, and yet they are rarely used; however they do add cost to your purchase. You may avoid the worry by making purchases from reputable brand-name products making an extended warranty unnecessary.
Rental Car Insurance – auto insurance policies offer additional coverage for the cost of car rentals; this is helpful if you find yourself in numerous accidents, but chances are good that you may use this once in your lifetime. When paying extra, even a small amount adds up over the years and you will likely spend way more than you would pay for that rental yourself.
Car Rental Insurance – when renting a vehicle you are always asked if you want additional insurance. If you have auto insurance chances are you are covered and do not need to pay for it twice. Check your policy!
Flood Insurance – if you live in a flood zone you need this insurance. If not chances are good, you will be paying for a disaster that you will never encounter.
Credit Card Insurance – it would be much wiser to limit your spending and not worry about paying your bill. In turn, you will save on insurance premiums and interest on your debt.
Unemployment Insurance – these policies only pay minimum payments on your bills if you are out of work. It makes much more sense to save your money and create an emergency fund; the upside is you may never need it, and you’ll have saved on premiums while collecting interest on your savings.
All of the above policies may provide peace of mind, but “only” in “certain areas”. Consider purchasing a general policy that offers coverage for a larger scope of potential incidents. Before you buy any policy, consultant with your trusted insurance agent and make sure you understand the terms, coverage, and costs. Be sure and read the policy thoroughly and factor in cost vs. benefits before you sign.
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