Six Types of Insurance You May Not Need
Insurance can give you peace of mind, but sometimes you can have too much of a good thing. While it's important to protect your financial well-being, some insurance products are likely to do little more than waste your cash.
Here are six types of insurance you probably can live without.
Credit card fraud insurance
Using your credit card to make purchases comes with risks. The credit card could get lost or stolen, or the number could fall into the wrong hands. A handful of insurance companies offer protection from credit card fraud, but it's not necessary.
"Credit cards already come with an amazing amount of protection under the federal rules," says Anthony Giorgianni, associate finance editor for Consumer Reports Money Adviser.
For example, if you are a victim of credit card fraud, you will not be liable for fraudulent charges to your account.
Rental car insurance
Planning to rent a car? Don't automatically opt to purchase rental car insurance if you carry full coverage on your auto policy. Chances are good the coverage will extend to any car you rent.
"Whether to buy coverage depends on whether you own your own car and if you have good coverage on the car," says Loretta Worters, spokesperson for the Insurance Information Institute.
Before renting, check with your insurer to find out what is and is not covered. Credit card companies also may offer rental car coverage, but it's important to know exactly what is covered and for how much.
Specified-disease insurance
Being diagnosed with a disease like cancer can be emotionally devastating and costly. To defray the costs, some insurance companies offer specified-disease health insurance that promises to pay out if you are diagnosed with the specific disease named in the policy.
Such supplemental insurance promises lower the cost of treatment but does not replace existing health insurance. And it's probably not necessary if you have health insurance and life insurance policies.
"These types of policies have been around for decades and appeal to particular fears," says Ric Edelman, president and co-chief executive of Edelman Financial Group. "They are overpriced polices."
Cancer insurance is often expensive and simply not necessary, Giorgianni says.
"With any specific-disease coverage, we say skip it," says Giorgianni. "Buying specific-disease insurance, you may be duplicating coverage you already have in your general health care plan."
Accidental death and dismemberment insurance
Accidental death and dismemberment insurance - more commonly known as AD&D insurance - covers you in the case of a fatal accident or a disabling accident, such as when you lose a limb or your eyesight.
But this type of insurance has restrictions and exclusions that prevent it from being worthwhile, Worters says. For example, to receive an AD&D benefit, your losses generally must occur within a few months of the date of an accident, Worters says.
"Also, you will only collect benefits if your death or injuries are proven direct results of the accident," she says.
It's also important to check the fine print on these policies. For example, typically you would be paid the full coverage amount for losing both limbs, but only half the amount if you lose one limb.
"Sometimes, you are better off with a life insurance policy and adding an accidental death policy or rider to it," says Worters.
Personal injury protection
Personal injury protection (PIP) is an extension of auto insurance that covers medical expenses and potentially lost wages and other damages in the event of the accident. This coverage applies to you as the insured driver, your passengers, and even pedestrians you may injure.
Some states require you to carry a minimum level of this type of insurance, while others do not.
This is one type of insurance that makes sense for certain policyholders, says Eric Bagnall, a benefits consultant adviser from at Allen Insurance and Financial in Camden, Maine. He notes that PIP has no deductible and premiums can be low.
"A lot of people are using this to protect themselves because the deductible has become so high with health insurance," he says.
Edelman says this type of insurance makes sense if you don't have an umbrella insurance policy.
"It's very inexpensive and very worthwhile if your typical auto insurance and homeowners insurance will not be sufficient," says Edelman.
Still, he says purchasing an umbrella liability policy makes more sense.
"If you can't get an umbrella, PIP is the fallback," he says.
Airline life insurance
Flying on a commercial airline is typically safe, but skittish fliers may take out airline life insurance just in case. Airline life insurance pays a lump sum in the event of an accident or death on a normally scheduled flight.
While this type of insurance could put a traveler at ease, it's probably not necessary, Worters says.
"If you already have life insurance, you might not need this coverage," she says, noting that people may want additional coverage anyway.
The original article can be found at Insurance.com:6 types of insurance you may not need