Insurance is supposed to protect you from the unexpected. The idea is you pay a little over time and the insurance company then covers the financial burden if disaster ever strikes. Car accidents and illnesses can be costly, so car and health insurance can help.
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But it seems like there are now insurance policies for lots of things -- and they’re not always worth it. It's important when considering the following four items to think about the risks and rewards of insurance -- you may decide that the peace of mind insurance provides is worth the cost. Here are four bills you may be able to cut out.
1. Rental Car Insurance Fixing a damaged car can be expensive so buying extra insurance when you rent a car seems like a smart move. You figure you’ll pay a little extra in case you get in an accident or the car is stolen. But that rental car insurance is not always necessary. If you carry regular car insurance, you may already be covered. Check your policy ahead of time to save some money. While you’re at it, check with your credit card company also. If you charge the rental to your credit card, many companies offer some coverage.
2. Extended Warranty Plans Extended warranty plans are offered when you buy many different items, especially electronics. When you are forking over a large sum to buy a new TV for the living room, you may be tempted to sign up for an extended warranty to cover the cost of repairing or replacing the item if anything happens. But remember this extended warranty is for the time after the manufacturer’s warranty is up. The manufacturer’s warranty already covers you for a specific amount of time. To decide if you need the additional coverage, think about how long it will be before you plan on replacing the item you’re buying.
3. Cellphone Insurance Buying the latest smartphone isn’t cheap, and it may seem as if the cost of cellphone insurance is negligible in comparison. If you’re reading this right now through a cracked phone screen or if you’ve ever dropped a phone into the toilet (surprisingly common!), this might be a wise investment. But many policies have a deductible and charge you monthly. Plus, some plans don’t take effect for a set period of time and if something happens before then, you have to pay out of pocket. Not all plans replace your phone with a new one. You may end up with a refurbished phone which you could buy yourself for cheaper than you paid for the insurance. And it will only be a matter of months before the newest cellphone model comes out and you upgrade anyway. It's important to crunch the numbers on the plan you're considering purchasing to make sure they pan out.
4. Pet Insurance Pets are often part of the family and it’s tempting to think they should have health insurance just like other family members. But similar to people policies, not all pet insurance plans are equal. Some cover only emergencies and you’ll still be paying out of pocket for regular vet visits and medicine.
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Many of these policies have high deductibles and low lifetime limits. So if your pet does need expensive surgery, you may have paid for insurance for years and still end up footing a very large bill. Do research and read the fine print before purchasing a pet insurance plan. As with all financial decisions, you have to think about your specific situation. Insurance policies can give you peace of mind but you should learn about the plan you buy so you’re not surprised by the terms if your pet needs expensive care.
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