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  The Society for Consumer Advocates and Mavens

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TEN INSURANCE POLICIES YOU MAY NOT NEED

Fear sells insurance! Buy insurance from an insurance provider and buy policies that are comprehensive. A policy should also cover catastrophic losses. A term-life insurance policy should be enough to cover the breadwinner's contribution to the family's expenses and the family may also want to have a comprehensive health insurance policy too. A disability health insurance policy to provide the family income if the breadwinner cannot work is also good to have, as well as the usual comprehensive homeowners and auto insurance policies to replace lost property. If you have all of the above you may not need to purchase the following ten insurance policies.

1-Mortgage life insurance pays off your mortgage if the family's breadwinner dies. This coverage is costly compared to term-life insurance which may accomplish the same thing. Anyway, the benefit declines in value as your mortgage is paid down each year.

2-Credit card loss protection pays off your losses if your credit card is stolen but federal law limits your loss to $50 per card so this coverage is overpriced by critics' standards. If you report lost cards quickly or keep your cards in a safe place there is conceivably little reason to purchase stolen credit card coverage.

3-Car rental insurance coverage is questionable especially if your credit card or your own auto policy covers you in rental cars.

4-Flight insurance may be unnecessary if you have good term-life insurance as well as comprehensive health insurance.

5-Cancer insurance may be costly and not even cover outpatient care. It may also be unnecessary if you have comprehensive health insurance which will cover you for cancer.

6-Credit-life insurance pays off the home mortgage if the family's breadwinner dies but a term-life insurance policy on the breadwinner's life if that person dies may be your best value when it comes to how much you pay in premiums over the life of the policy.

7-Credit disability insurance pays off any outstanding loans you may have if you are unable to work but it may not be necessary if you have comprehensive disability coverage.

8-Involuntary unemployment insurance makes the minimum payments on your credit cards and auto loan but if you have a good emergency fund the cost of this coverage is unnecessary.

9-Accidental death insurance only covers you if you die in an accident but only around 5% of deaths each year are due to accidents so consider getting good term-life insurance which covers you no matter how you die.

10-Identity theft insurance typically does not cover unauthorized charges using your name or funds siphoned from your bank account so with or without this type coverage it may not be a bad idea to check your credit report regularly.

When buying any kind of insurance or supplemental insurance beware of restrictions, the less restrictions possibly the better the coverage. A low priced policy may be the worst policy due to unforeseen rate increases in the future. Supplemental coverage may be best for people who can afford to pay premiums year after year.

Beware of insurance salespeople who misrepresent the policies they sell. They may not explain in detail the benefits, restrictions and limitations and their sales pitch may be too brief. They may also leave out potentially very important points that policyholders should know BEFORE signing up for coverage if consumers are to make an educated buying decision.

On the other hand, sales pitches may go on forever grinding down your resistance. Beware of scare tactics, armtwisting sales tactics or when few written materials are made available during or after a sales pitch.

SUPPLEMENTAL SOURCE: CONSUMER REPORTS MAGAZINE JULY 2004

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