By  Thu Mar 14, 2013

6 Insurance Policies Not Worth Your Money

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 MIKI Yoshihito / flickr | http://www.flickr.com/photos/mujitra/5232270530/in/photostream/

Life Insurance for Children

Several companies market life insurance for children, although the most well-known is probably Gerber Life and their Grow Up Plan.

Life insurance is designed to take care of your dependents if you should pass on before they’re ready to take care of themselves, so there isn’t much need for children to have their own life insurance policy.

A typical child life insurance policy might cost about $3-4 per month for a $5,000 whole-life policy. After paying on this policy for 20 years, the guaranteed cash value wouldn’t quite equate to what you paid in premiums.

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 Aurimas / Flickr | http://www.flickr.com/photos/needoptic/4437481756/

Flight Insurance

Airlines will offer flight insurance when you buy your tickets. It offers a cash payout to your beneficiary if there is a plane accident that results in your untimely death.

Most people feel flight insurance is a waste of money because airplanes rarely get into accidents and crash, and you should have life insurance to cover your dependents in the event you die before they are able to take care of themselves.

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Credit Card Insurance

Most credit card companies encourage cardholders to sign up for their credit card insurance programs -- the cost is equal to a percentage of your monthly credit card balance. In the event of the cardholder's death or incapacitation, the insurance will pay some or all of your credit card balance.

However, many claims based on disabilities are denied if they are considered a pre-existing condition or because the credit card company doesn’t consider the particular disability the cardholder as totally disabled.

If you should die, and the credit card debt was in your name only -- no one else is going to be responsible for your credit card balance.

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 anaa yoo / Flickr | http://www.flickr.com/photos/54844390@N05/5110231975/

Pet Health Insurance

Health insurance for Fido or Fluffy seems like a great idea. If you’ve ever taken a pet to the veterinarian, you know how expensive it can be!

The problem with pet insurance is the number of exclusions or deductibles and limitations the policies have, which means you end up paying the monthly premium plus the out-of-pocket expenses which are not covered by the policy.

Instead of paying for monthly pet insurance premiums, it’s recommended that you budget about $300-500 per year for routine health care for your pet.

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 Marcin Wichary / Flickr | http://www.flickr.com/photos/mwichary/2227188441/

Cell Phone Insurance

For a monthly premium of $4 to $8 per month and a deductible ranging between $25 for basic phones and $200 for smartphones, cell phone insurance will replace your phone if it is broken, lost or stolen.

If you have your phone for a year with a cell phone insurance policy, you would have paid about $48 to $96 in premiums. You will then need to pay the $25 or $200 deductible and probably receive a refurbished phone as a replacement.

You can purchase refurbished phones for less than the insurance policy and deductible (from eBay or even from your cell phone provider) or just hang on to your old phone as a backup.

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 Morgan / Flickr | http://www.flickr.com/photos/meddygarnet/2989795183/

Rental Car Insurance

Before you agree to pay extra for car insurance when you rent a car, check your own auto insurance policy, as many already include coverage.

On the other hand, if you rent cars infrequently and discover the car rental damage fee  is lower than what you pay per year to cover rental car damages on your insurance policy -- cancel the rental coverage on your policy and simply pay the fee when you rent a car.

Also, your credit card may already offer rental car insurance.

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Add Your 2 Cents

  • -D

    Life insurance on children is NOT about the current financial loss if something happened… It’s about insuring THEIR future insurability when THEY need to get insurance for THIER future families. Look, we have NO idea if they may someday become uninsurable and locking-in inexpensive, upgradable coverage at a young, health rate is VERY key for THEIR future planning. Worst case: the kid doesn’t want it and you cash-out for all the premiums you paid since it started. You need to think beyond yourself.

    • ctak

      Yes, we completely agree. When considering the many different types of insurance you can purchase, the most important factor is how it impacts you and your family.

    • Ed

      I’d like to add that if you pay even $5.00 per month for a child’s life insurance policy, that $5.00 per month equals $60.00 per year. Multiply that $60.00 per year (if the rates don’t increase) by 20 years and the premium paid is $1,200 per year. And as -D pointed out, it is about “THEIR future insurability when THEY need to get insurance for THEIR future families.” In regard to current financial loss, if a parent or parents suffer the death of their child they are going to need to come up with the cash for their child’s funeral expenses as well as the possible loss of their own income or incomes until they can find themselves getting back to work again.

  • burned

    RE: rental car insurance. Since that is a BIG money maker for the rental company, they want you to buy it. So some of them have found a way to make the alternative undesirable. They charge YOU the daily rate of the car while it is being repaired. Since they can control the repair schedule, and this is found money to them, it can add up fast. The credit card, nor your own insurance will likely pay for that charge. Check with your credit cards and auto insurance carrier to determine if they WILL or WON’T cover that.

  • Kelsey Ann Dodge

    Insurance for children is tricky. Did you know that a child diagnosed with Diabetes will be unable to buy term life insurance as an adult? That policy you buy for them as kids may be the only policy they have as adults. Many of them are convertable or allow for the policy owner to increase the face amount when the child turns 18 or 21.

    Another consideration is “funeral insurance.” A small life policy of $10 or $20k would cover the funeral expenses and let mom and dad have time off from work to grieve should the unfortunate happen. We don’t want to think about our children dying, but how much worse would it be to HAVE to work after an untimely death? Worth $4-$8 a month, I’d say.

    There’s a big bad world of scary things and we can’t spend all of our income on premiums, but sometimes the insurance is worth the peace of mind.