(Tiny Tips) – Insurance Policies – Everyone should have some type of insurance. Car insurance, health insurance, and home insurance (if you own a home) easily round out the top three. Life insurance and nursing care insurance are also worthy of attention.
These can help protect your health, life, and property. At the same time, they provide financial security for your loved ones. However, some types of insurance may not be necessary. When determining your needs, check whether you actually need these policies.
Key Takeaways
- Everyone should have some insurance policy. But most people are probably better off without anything else.
- Mortgage life insurance, travel and flight insurance, and cancer insurance are three types of insurance you probably don’t need.
- These strategies are usually not required. This is because your existing insurance policy may already cover these situations.
Insurance Policies You Don’t Need
While there are many policies that have a place in your life, there are also many that you might be better off without. In theory, they might sound tempting. But in reality, you might be wasting money.
Here are three types of insurance you most likely don’t need.
1. Mortgage Life Insurance
Mortgage life insurance is a policy that promises to pay your mortgage if you become disabled or die. This may sound attractive. However, this type of insurance also has some disadvantages.
Mortgage life insurance coverage is very narrow. It only covers your mortgage. If you die without traditional life insurance, your loved ones will not receive any further financial benefits.
Mortgage life insurance can be more expensive than regular life insurance. Additionally, death benefits decrease over time. This is because these policies are designed to cover the outstanding amount of your mortgage. Essentially, if you expect to make regular home loan repayments, you may pay higher premiums due to reduced coverage.
Important: Mortgage life insurance coverage is very narrow. Therefore, this may not be the best use of insurance premiums. It’s best to stick with quality life insurance. If you’re worried, you can always add life insurance coverage to offset your mortgage balance.
Tip
Be sure to compare your life insurance options. For example, term life insurance may offer lower premiums. However, you only get coverage for a certain period of time. Permanent life insurance provides you with lifetime protection; the disadvantage is that premium costs are higher.
2. Travel and Flight Insurance
Travel and flight insurance offers another type of coverage that may require you to pay a premium that may overlap with the benefits you already have. Before spending money on travel insurance, review your current health and life insurance policies. Learn how to cover accidents or injuries while traveling or flying. In the event of a disaster, your life insurance should cover you if you die while traveling.
If you used a credit card to book your tickets or travel arrangements, you should also check with your credit card company. Travel coverage may be included in your account. Many credit card companies offer benefits automatically; this can include rental car insurance, lost luggage insurance, or travel accident insurance. They may be part of your cardholder agreement. It’s important to note that you must book these travel expenses with this card to take advantage of these benefits.
What if you find that you still need additional coverage for peace of mind? You can always buy a small travel policy to cover any shortfalls.
Notes
Credit card travel insurance may not protect you in all situations. For example, if your trip is canceled due to some natural disaster, your card may not be able to reimburse you for the cost of your trip.
3. Cancer or Disease Insurance
As the incidence and awareness of cancer increases, critical illness coverage such as cancer insurance is becoming increasingly popular. So is it really a worthwhile investment? Indeed, cancer treatment can involve significant medical costs. However, you may want to hold off on purchasing cancer-specific insurance.
Here’s why: In most cases, your basic health insurance will cover the medical costs associated with cancer treatment. If you’re worried that expensive treatments will leave you stranded once your coverage limits are reached, take a look at your current policy. Find out how much your policy pays.
One shocking reason why cancer insurance can be a waste of money is that most cancer policies don’t even cover skin cancer. Skin cancer is very common.
Additionally, cancer insurance generally does not cover outpatient costs associated with cancer treatment. There’s always a chance you won’t get cancer at all. In this case, you need to ask yourself what exactly you are paying for these types of policies.
In some cases, your health insurance may not cover cancer-related costs. Or there’s a good chance you’ll develop a type of cancer that would be covered by cancer insurance. But outside of these situations, you may just be wasting money on cancer insurance.
Warning
Keep this in mind: In some cases, your primary health insurance may not cover you if you have supplemental coverage for the same type of treatment elsewhere. As with any type of insurance, you should make sure you fully understand it before purchasing it.
If you have life insurance, it’s worth checking whether it contains a rider that allows you to use part of your death benefit to pay for critical care costs throughout your life. Some policies allow you to claim a death benefit to cover end-of-life expenses. However, this will reduce the amount that must be paid to your heirs after your death.