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Coverage You Can Do Without

Article

When you’re looking to cut some spending, a good place to start is by reviewing some other insurance policies that are probably not worth the premiums.

There are some insurance policies that you absolutely have to have, including home, health, life, and auto coverage. But when you’re looking to cut some spending, a good place to start is by reviewing some other insurance policies that are probably not worth the premiums. According to Consumers Union, most narrowly focused or single-purpose policies are a bad deal. Even with necessary insurance, say insurance experts, many consumers opt for low deductibles that boost the premiums on the policy.

Some examples of cash-draining insurance policies are accidental death coverage, dread-disease policies, flight insurance, and mortgage life insurance. You can eliminate or avoid all of these, say insurance mavens, by buying adequate life insurance.

Note: Mortgage life insurance, which will pay off your mortgage if you die, is different from personal mortgage insurance, which most lenders require if you put less than 20% down on a mortgage. PMI protects the lender in case you default on the loan for any reason.

Another place to save money is on auto collision coverage. If you lease or finance your wheels, you may have to buy it, but that doesn’t mean that you can’t choose a higher deductible. Most auto insurance experts say that any deductible below $1,000 is probably a waste of money. And for an older vehicle that you own outright, think about dumping collision coverage entirely. Extended warranties are another chance to save. Retailers with paper-thin margins on appliances add billions of dollars in revenue by aggressively pushing these policies, but most major appliances are already covered by a manufacturer’s warranty.

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice