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While each person's circumstances are different, it's important to look at all the specifics of your situation before making a decision about whether or not to purchase certain types of insurance. It's important to weigh the risk with what you're actually paying for the protection. For most people, there are areas where an insurance policy doesn't make financial sense because suffering the consequences of a loss turns out to be a better risk than paying the money that the insurance policy would cost.
It's important to remember that making a decision not to get insurance doesn't mean that there is no risk involved of the particular misfortune happening. Risks always exist. The key is balancing the risk with the amount you'd pay for the insurance and your ability to pay if the unfortunate event occurred. Considering all these aspects and coming to an answer is often not an easy exercise in financial planning. To help, here are different types of insurance that most people don't need and shouldn't pay for:
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<b>Comprehensive / Collision Auto Insurance (For Older Cars)</b>: Most people keep the same amount of insurance on their car throughout the car's life. The fact is that as your car gets older, it is worth less money and you should consider whether you still need the comprehensive & collision portion of your insurance. This is necessary because if you do get into an accident or sustain damage to it in some other way, the insurance company will never pay more than it's worth. That means that if the Kelly's Blue Book value of the car is $2,000 and you do damage that will require $5,000 in repair work, the
insurance company will only pay $2,000 minus whatever the <a href="http://www.savingadvice.com/forums/showthread.php?t=45">auto insurance deductible</a> would be. By paying what the insurance would cost for the comprehensive and collision portion of the insurance policy, you could save up what the insurance company would actually pay out.
<b>Life Insurance For Singles With NO dependents</b>: The reason to purchase life insurance is to replace an income that is lost with death so that the dependants have enough money to survive on without the income. If you are single and there isn't anyone who is counting on the money that you earn for their daily living expenses, then there isn't any reason to have life insurance.
<b>Life Insurance For A Child</b>: Life insurance policies aimed at children are usually sold on emotion and not on a true financial need. If you look closely at advertisements for child life insurance, they will have a theme of "if you really love your child you'll buy this policy." Your love toward your child is not determined by whether or not you have a life insurance policy for him or her. While the commercials will try to appeal to your emotions, the financial facts are that a loss of a child will actually relieve you of a financial commitment. You will have many less expenses without a child than when you have one. Since life insurance is meant to replace an income that is lost when one dies, and a child rarely has an income, child life insurance rarely makes sense. Unless you're in the enviable position where your child is the main source of income for your family, there is probably not a need to have life insurance for him or her.
<b>Travel Insurance Bought At The Airport</b>: All those travel insurance policies from kiosks at the airport play on your fears and you page a huge price for falling for them. Chances are for most trips you won't need any travel insurance at all. You need to check what your medical health insurance and life insurance cover to make sure, but these will cover you for most in country accidents. If you pay for the trip with your credit card, you will probably have some <a href="http://www.creditcardadvantages.com/travel_insurance.html"> credit card travel insurance</a> coverage from it, too. If you're traveling overseas, you'll need to do a little more research to see what exactly you're covered for and what you're not. At that point you'll want to purchase travel insurance for the specifics of the trip that you're current insurance doesn't cover (not a generic plan that probably doesn't cover anything you aren't already covered for from your own insurance).
<b>Rental Car Insurance</b>: When you walk up to a rental car counter, you won't leave before they ask you if you want numerous types of insurance that you probably haven't even considered before the questions were asked. To prevent purchasing insurance you don't need, you should take the time to call your current auto insurance company and see exactly what your policy covers if you rent a car. Take a few more minutes after that and call your credit card company and see what <a href="http://www.creditcardadvantages.com/rental_car_coverage.html">rental car insurance</a> they provide if you'll be renting the car using their card. Once you know both of these, you'll know exactly what you need and don't need when renting a car. The chances are that you won't need any, and certainly not all, the policies that the rental car company will be trying to sell you.
<b>Extended Warranties On Appliances</b>: When you purchase a new appliance or electronic device, you'll almost always be asked if you would like to purchase extended warranty protection. You're almost always better off taking the money you'd pay for the extended warranty and placing it aside into a bank account. Extended warranties are usually expensive and only are worthwhile for a short window (of maybe a year or two) between when the manufacturer's warranty ends and the extended policy becomes more expensive than replacing the item yourself. While the salesperson will place high pressure on you to get the extended warranty, it's because they get a fat commission for selling it, not because you really need it.
<b>Roadside Assistance</b>: When you purchase a car, you will almost always be asked if you want to purchase roadside assistance. Before you purchase it, find out if you already have it through another organization that you belong to or if it is included in your auto insurance policy. There is no reason to pay for something you already have. If you do need it, opt for doing it through AAA or your own insurance where you'll receive better benefits for a less expensive price.
While your circumstances may be different than the average person, if you have - or are thinking about - purchasing any of these types of insurance, it would pay to sit down and thoroughly study if they truly make sense for your current circumstances. by doing so you'll make sure you're paying for what you need and not paying for what you don't need.
It's important to remember that making a decision not to get insurance doesn't mean that there is no risk involved of the particular misfortune happening. Risks always exist. The key is balancing the risk with the amount you'd pay for the insurance and your ability to pay if the unfortunate event occurred. Considering all these aspects and coming to an answer is often not an easy exercise in financial planning. To help, here are different types of insurance that most people don't need and shouldn't pay for:
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<b>Comprehensive / Collision Auto Insurance (For Older Cars)</b>: Most people keep the same amount of insurance on their car throughout the car's life. The fact is that as your car gets older, it is worth less money and you should consider whether you still need the comprehensive & collision portion of your insurance. This is necessary because if you do get into an accident or sustain damage to it in some other way, the insurance company will never pay more than it's worth. That means that if the Kelly's Blue Book value of the car is $2,000 and you do damage that will require $5,000 in repair work, the
insurance company will only pay $2,000 minus whatever the <a href="http://www.savingadvice.com/forums/showthread.php?t=45">auto insurance deductible</a> would be. By paying what the insurance would cost for the comprehensive and collision portion of the insurance policy, you could save up what the insurance company would actually pay out.
<b>Life Insurance For Singles With NO dependents</b>: The reason to purchase life insurance is to replace an income that is lost with death so that the dependants have enough money to survive on without the income. If you are single and there isn't anyone who is counting on the money that you earn for their daily living expenses, then there isn't any reason to have life insurance.
<b>Life Insurance For A Child</b>: Life insurance policies aimed at children are usually sold on emotion and not on a true financial need. If you look closely at advertisements for child life insurance, they will have a theme of "if you really love your child you'll buy this policy." Your love toward your child is not determined by whether or not you have a life insurance policy for him or her. While the commercials will try to appeal to your emotions, the financial facts are that a loss of a child will actually relieve you of a financial commitment. You will have many less expenses without a child than when you have one. Since life insurance is meant to replace an income that is lost when one dies, and a child rarely has an income, child life insurance rarely makes sense. Unless you're in the enviable position where your child is the main source of income for your family, there is probably not a need to have life insurance for him or her.
<b>Travel Insurance Bought At The Airport</b>: All those travel insurance policies from kiosks at the airport play on your fears and you page a huge price for falling for them. Chances are for most trips you won't need any travel insurance at all. You need to check what your medical health insurance and life insurance cover to make sure, but these will cover you for most in country accidents. If you pay for the trip with your credit card, you will probably have some <a href="http://www.creditcardadvantages.com/travel_insurance.html"> credit card travel insurance</a> coverage from it, too. If you're traveling overseas, you'll need to do a little more research to see what exactly you're covered for and what you're not. At that point you'll want to purchase travel insurance for the specifics of the trip that you're current insurance doesn't cover (not a generic plan that probably doesn't cover anything you aren't already covered for from your own insurance).
<b>Rental Car Insurance</b>: When you walk up to a rental car counter, you won't leave before they ask you if you want numerous types of insurance that you probably haven't even considered before the questions were asked. To prevent purchasing insurance you don't need, you should take the time to call your current auto insurance company and see exactly what your policy covers if you rent a car. Take a few more minutes after that and call your credit card company and see what <a href="http://www.creditcardadvantages.com/rental_car_coverage.html">rental car insurance</a> they provide if you'll be renting the car using their card. Once you know both of these, you'll know exactly what you need and don't need when renting a car. The chances are that you won't need any, and certainly not all, the policies that the rental car company will be trying to sell you.
<b>Extended Warranties On Appliances</b>: When you purchase a new appliance or electronic device, you'll almost always be asked if you would like to purchase extended warranty protection. You're almost always better off taking the money you'd pay for the extended warranty and placing it aside into a bank account. Extended warranties are usually expensive and only are worthwhile for a short window (of maybe a year or two) between when the manufacturer's warranty ends and the extended policy becomes more expensive than replacing the item yourself. While the salesperson will place high pressure on you to get the extended warranty, it's because they get a fat commission for selling it, not because you really need it.
<b>Roadside Assistance</b>: When you purchase a car, you will almost always be asked if you want to purchase roadside assistance. Before you purchase it, find out if you already have it through another organization that you belong to or if it is included in your auto insurance policy. There is no reason to pay for something you already have. If you do need it, opt for doing it through AAA or your own insurance where you'll receive better benefits for a less expensive price.
While your circumstances may be different than the average person, if you have - or are thinking about - purchasing any of these types of insurance, it would pay to sit down and thoroughly study if they truly make sense for your current circumstances. by doing so you'll make sure you're paying for what you need and not paying for what you don't need.
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