Six Types of Insurance to Avoid

Insurance is a monthly expense for most of us.  Whether it is auto, home or renters insurance it is always there for us to consider.  However, there are types of insurance that you should avoid.  Some are obvious and others can be subjective and maybe even controversial.

First, the obvious types to avoid:

Extended warranties on small purchases.  You might be able to make a case for purchasing insurance on a device that you use in your business and would be in dire straits if you were without, like a computer, but you cannot justify buying insurance on a toaster or other like item.  Anything that is considered a ‘throw-away’ is not worthy of spending money on for insurance purposes.

Flight insurance.  Ever walk through an airport terminal and see the standalone kiosks from which you can purchase life insurance?  Not a good idea, especially if you have life insurance already on yourself.  Just keep walking.

Credit card insurance.  This is another avenue that credit card issuers try to get you to purchase in order to boost their profits.  It sounds somewhat enticing to have your credit card bills paid if you become disabled or worse, but ask some who have tried to collect on that insurance.  It clearly has ‘opportunity cash’ written all over it for credit card companies.   Do not fall for this one.

Some insurance that you can make a good case for avoiding:

Car rental insurance.  Most automobile policies on your own vehicle cover you if you are driving a rental car, but it is a good idea to check with your agent to find out for sure.  And also, find out what limitations there might be.  Coming from the rental car company, their policies are not comprehensive and can have loop holes in them as well.  Be sure to read the fine print before deciding whether or not this is a good route for you to go.

Universal life or cash value insurance.  A long debate concerning universal life policies and weather they are worth purchasing rolls on.  If you choose this type of policy, make sure that you do not keep this as the only investment and/or long term savings plan that you have.  You can get much better returns for your investment dollar by using a good investment counselor who can recommend good buys in mutual funds which can outperform any universal life policy.

Pet insurance.  The question to ask here is ‘what is the purpose of this insurance?’  If your pet is that important to your family because it has become a ‘family member’ then you might feel strongly about buying pet insurance.  But what does it provide for?  The payment for a proper burial and/or a send off if the pet dies?  This one has ‘emotions’ written all over it and if you choose to purchase this insurance you are not using your money wisely.  But, if you have the disposable income with which you can afford the premiums, then it is your business alone to make the decision to purchase this type of insurance.