Insurance is a great investment and is a key aspect in financial planning. However, getting too much insurance is a situation that anyone must avoid. Unlike life insurance that compensates well in the case of premature death, some types of insurance are company schemes that lead to loss of money in the long run. Understanding what insurance features to avoid can save you a lot of money. Here are some types of insurance which a consumer may want to ignore.
Insurance for Natural Disasters
A great concern for homeowners would be to insure their homes against destructive natural disasters. This may be a smart move for people who live in disaster-prone areas, but may be a futile move for people who live in fairly safe places. Natural disasters strike a pattern in many places and research should be done before one proceeds to purchase this type of insurance.
For consumers who buy a lot of appliance, another concern would be to insure items in case they break or cease to function. This is mostly an impractical move as one might actually end up spending as much money on the extended warranty as the cost of replacing the product. The cost of insurance may also be greater than what’s needed to have a broken item repaired. Most appliances come with manufacturers’ warranties and this is usually sufficient. If there are none, one may use his credit card to provide policy for such items.
Mortgage Life Insurance
Owning a home may lead to the bombardment of offers from companies who sell mortgage life insurance. This type of insurance seeks to pay off a consumer’s mortgage in case he dies. This may sound substantial, but will seem unreasonable when the lender is actually the beneficiary. A consumer may be better off spending an equivalent amount of money for a term life insurance, which provides enough money for loved ones to pay off mortgage when the unexpected happens.
Life Insurance for Minors
The major goal of getting life insurance would be to replace the income of a decedent in the case of his death. This is very helpful for people who are major providers in their family. Practically, this case barely applies to children who do not have jobs. Instead of buying them life insurance, try to use the amount earmarked for a premium to fund their education. This could also be transferrable to siblings or other eligible family members in case of an untimely death.
Your author Kevin Walker hopes you will find this post useful. He also writes for insurancecomparison.net.