Insurance is an extremely important part of our daily lives. It is designed to mitigate the potential risks that we face every day. The problem with insurance is that the range of products that falls under insurance is extremely diverse. It is definitely difficult at times to figure out what are the essential types of insurance that you would need and what types of coverage you can safely do without. Here is a short list of insurance policies and purchases you can consider not to invest in.
- Child life insurance plan – The actual idea behind buying a life insurance policy is to ensure that your family’s financial security in case the worst comes to pass. A life insurance policy is meant to cover the monetary gap left behind in the event of the primary breadwinner’s death. A child is neither a breadwinner nor does he make any financial contribution towards the household. Moreover, you can expect your child to grow up safe and healthy without making too much of an assumption. Therefore, investing in a Roth IRA, a 529 plan or a college education fund makes more sense than spending money on your child’s life insurance premium.
- Specific disease insurance – Most health insurance policies have glaring loopholes in them which you usually won’t recognize unless you end up in one. The primary fear of being afflicted by some disease which is not covered under the regular health insurance plan prompts people to invest in policies which are apparently designed for specific diseases. This has led to the growing popularity of such policies, especially cancer insurance, over the last few years. Purchasing these supplemental policies to fill the coverage gaps in a general health insurance policy has become a steady trend. The problem with these policies is that they are so specific that they do not necessarily cover the medical cost comprehensively. The biggest example of this fact is that cancer insurance policies do not carry coverage for skin cancer which is the most commonly occurring form of the disease. Therefore, it’s a better idea to invest you funds in purchasing a more comprehensive health insurance policy or upgrading the present one.
- Mortgage life insurance – This particular insurance policy may seem quiet reasonable at first glance but if you look a little deeper; you will find the fallacy of the concept. The mortgage life insurance policy is designed to pay off the mortgage on a property in the event of the insured’s death. It seems like something people should consider purchasing but the fact of the matter is this; a good life insurance policy will have an adequate death benefit to cover the family’s financial needs which also includes the mortgage payment. There is absolutely no need to get this policy unless you have pre-existing conditions which prevents you from getting an adequate life insurance policy.
- Credit card insurance – Purchasing a policy for paying off your credit card bills in case you are entirely unable to do so seems like a good idea on the surface. The logical argument against purchasing this type of policy is that you will be paying a monthly premium on the policy and carry around a credit card debt as well. It makes much more sense to use the monthly premium amount to pay the credit card bills. This way you will be rid of the debt faster, save money on interest and avoid the hassle of having to pay an extra bill.
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