Insurance Matters
Types of insurance policies to throw in the garbage
BY: ANDREW STEWART
Many people fall victim to fear or slick salesmanship to be convinced of the need to purchase some kind of special insurance coverage. A lot of people will come and ask me about all different types of insurance that they either saw an advertisement online or in a newspaper that had peaked some type of emotion. And I would say 80% of the time that is a feeling of “Fear” of the “What If”. Because we can’t predict the future, we want to be ready to cover our financial needs if, or when, something bad happens.
Insurance companies understand this fear and offer a variety of insurance policies designed to protect us from a host of calamities that range from disability, accident to disease and everything in between. Certainly, some forms of insurance like health, home, auto, life or long-term disability coverage are necessary components of your wellbeing and security. While none of us wants anything bad to happen, many of the potential catastrophes that happen in our lives are not worth insuring against. In my opinion the following types of policies you’re probably better of saving your money.
- Accidental Death Insurance
Unless you are 15 to 30 years old, you are much more likely to die from cancer, heart disease, stroke or respiratory disease than from a freak accident. Major catastrophes such as car wrecks and fires are covered under other policies, for example like harm that comes to you while at work. Accidental-death policies are often fraught with stipulations that make them difficult to collect on and is often referred to as Las Vegas coverages, so skip the hassles and get life insurance instead.
- Credit Card Insurance
By law, most credit card fraud losses are capped at $50 per card with prompt notification, and most banks or credit unions have a zero-liability limit of stolen credit cards. A far better idea is to avoid running up your credit cards in the first place, so you won’t need to worry about the bills. Furthermore, the insurance schemes that offer to pay off of your credit card “balance owed” due to disability or death is better avoided, in favor of a traditional long-term disability or life insurance policy.
- Mortgage Insurance
Private mortgage insurance uses the same sales approach as a credit card. The infamous private mortgage insurance is well-known to homeowners because it increases the amount of their monthly mortgage payments. PMI is an insurance policy that protects the lender against loss when lending to a higher-risk borrower. The borrower pays for this insurance but derives no benefit. Fortunately, there are several ways to avoid paying for this unnecessary policy. Put down at least 20% and the PMI requirement goes away. Now that is obviously easier said than to actually do, especially with house prices they way they and tougher lending rules. The only exceptions may occur if you are unable to obtain life insurance due to age or illness and want to ensure that your property’s mortgage is paid off at your death.
- Extended Warranties
Extended warranties are available on a host of appliances and electronics. Who can remember which items you bought such coverage for and until when? From a consumer’s perspective, they are rarely used, particularly on small items such as DVD players and radios. Why buy an extended warranty from a reputable retailer or manufacturer that should provide a reasonable warranty, to begin with?
- Child Accident Insurance
Child accident Insurance reimburses for accident-related medical and dental expenses not covered by provincial, extended health or dental plans. You can get a comprehensive plan for as little as $33 per year. Eligibility is for residents of Canada only and must have Provincial Medical Coverage.