Just how much insurance is enough It seems like there is an insurance policy for everything these days. Although it is important to have insurance for your family’s future, many of the available policies are a waste of money, says Money Smart author Ted Hunter. He lists 10 of the most common offers consumers will encounter but should avoid.
Life insurance for children- The purpose of life insurance is to cover the living expenses of dependants. Unless there is a major child star in the family, nobody is depending on their children for income and so this just doesn’t make sense.
Warranty insurance and maintenance policies- These policies cover repairs that are not covered by the warranty that comes with the product. Most consumers will spend less on repairs than on the insurance. Skip the insurance and cover the expense should it even arise.
Mortgage protection life insurance- The idea behind these policies is that homes will be fully paid off in case of death. This is nothing more than a term insurance policy, but at a much higher rate (as much as 200% more). If more coverage is desired, increase the size of term-life insurance policies. This is a much cheaper way to go and offers greater financial flexibility for families in the unfortunate event that a mortgage holder dies.
Credit card theft insurance- Federal law already limits a consumer’s credit card liability for unauthorized charges to a maximum of $50. The FTC (Federal Trade Commission) singles out credit card theft insurance as the biggest type of scam out there today. But there is a loophole. The $50 liability limit does not include debit cards (nor does credit card theft insurance). Most financial institutions also cover debit cards but, to be sure, call and find out. If they do not cover debit cards, move to an institution that does.
Identity theft insurance- For the most part, these plans do not reimburse the consumer for the money lost, just for the expenses incurred if identity theft occurs. It would cover expenses such as phone calls, copying fees, and lost wages. By and large these plans aren’t worth it.
Credit life insurance/credit card balance insurance- These policies pay off credit debt upon death. This is that same situation where the premiums are ridiculously high compared to term-life insurance rates. This is another attempt to play on emotions or take advantage of fear. If you feel you need more coverage, the best bet is to lose this policy and raise term-life insurance instead.
Trip insurance- This insurance reimburses the consumer for canceled planned trips or vacations and is almost surely a losing proposition. The best approach is to be willing to cover any amount(s) that might be lost in the unlikely occurrence that an expensive trip is cancelled.
Flight insurance- This is extra life insurance in case the plane crashes. Very few people are killed this way and so it is a terrible deal.
Travel life insurance- Travel life insurance pays if a death happens while traveling. It preys on people’s fears and is just one more bad deal.
Wedding insurance- This covers the added cost that might occur should the wedding be postponed due to illness on the part of the bride or groom, missing vendors, damage to the reception site should the place not have its own insurance, etc. Once again, the insurance company will have done its homework. What is covered, and the rates charged, makes it a winner for the company, not the consumer, even given all of the marketing and selling expenses the insurer pays out. These policies do not pay off if either the bride or the groom changes her or his mind.
“Insurance is important and taking care of the future of your family in case of tragedy is important, but be Money Smart,states Hunter, “don’t waste your hard earned money on these expensive and ultimately useless policies.
Combining Hunter’s sixty years of experience and a common sense approach, Money Smart shows readers that they are capable of managing their money better than anyone else. Presenting easy-to-use tools and a clear list of rules to follow, Money Smart teaches readers to make solid, educated decisions so they can effectively eliminate debt, manage their money and make their dreams a reality.
Money Smart can be purchased online at http://www.MoneySmartOnline.com and Amazon.com.
About the Author
Ted Hunter is a successful business man who, thirty years ago, built a successful real estate brokerage with over 100 agents, which went bust in the real estate crash of the late 0s. Learning from this experience he then entered into the stockbrokerage industry, successfully helping his clients make money and advising his clients to get out of the stock market in early 2000 before the market started to dive. In the fall of 2005 he did it again, warning all who would listen of the coming crash of the real estate market. He wrote Money Smart to share his knowledge of cycles in both the real estate and financial markets and to help people take control of their money and create financial freedom.
Ted is a native of the New York City area and now resides in Davis, California, with his wife, Suchit, and their daughter, Kat. Ted is also the proud father of three adult sons: John, Dave, and Dan.
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