-
Step 1
CREDIT CARD BALANCE INSURANCE: Sounds good. If you become disabled, sick, or loose your job, your credit card debt will get paid off for you. Or will it? Most of the time it's not. You'll dish out close to 10% of your current credit card balance for this insurance which would be better spent paying off your current credit card balance and saving the rest to build up a minimum three to six month emergency fund to cover your bills in the event you are laid off or become ill and can't work.
-
Step 2
CREDIT CARD THEFT INSURANCE: The FTC (Federal Trade Commission) has named this insurance the biggest type of scam out there today. Maybe you've gotten a note in the mail or or a call from someone selling this insurance to you. Usually this insurance retails for $50-100 a year. However, look closely. The Federal Law limits your credit card liability for unauthorized charges at $50! So you probably won't get back what you put in on this one.
-
Step 3
COLLISION INSURANCE: This one could be good if you look closely and do the math right. Collision insurance often pays repairs for your own vehicle. But if you drive a several year old car only valued at $1500 and you pay close to $500 a year to have this insurance and have a $1000 deductible, um, you just paid your insurance company for a replacement car. And if you happen to get your vehicle totaled, insurance companies will often pay out less than the vehicle is owed. You may only get $500-700 for your car. The rule of thumb is if your annual collision premium is more than 10% of what you can sell your car for, get rid of the collision policy. It won't pay off for anyone but the insurance company.
-
Step 4
MECHANICAL BREAKDOWN INSURANCE: This insurance is often tried to be sold to you during your new car purchase, or from your credit union or bank when you finance your car. But will it pay off? A recent Today show article states a big N-O! Too many of these companies have too many loopholes for car repairs and don't pay off in the end. And if you own a new car that's still under warranty you're already covered so why take out a policy for something that's covered?
-
Step 5
TRAVEL INSURANCE: You gotta love the fact that airport kiosks dole out life insurance policies to cover you in case the plane you're about to take decides to take a nose-dive and crash. It's only $60 per trip which seems like nothing nowadays when you add in other airport fees and luggage charges. The fact? You're already covered by your term or whole life insurance policy. What about that pricey trip insurance cancellation policy that gives you more freedom and flexibility? If you're okay adding another 9-12% on your trip cost go right ahead. But don't expect much in return. The policy won't reimburse you if you have to cancel because of a work conflict or illness that was "preexisting." Some claim that they have had trouble covering a nasty case of food poisoning from the day before the trip because it was deemed "preexisting." A comprehensive policy that covers everything could cost up to 18% of your trip. Another piece of advice? Never buy it from the agency that booked your trip. You're better off buying it from a reputable third party who will prtect you in case the company goes out of business before you set sail.
-
Step 6
IDENTITY THEFT INSURANCE: Up to 15 million people get their identity stolen each year. At only $50, you can be protected from identity theft. But what are these policies NOT covering? It doesn't pay back the money stolen from your bank account. It only gives you back the expenses racked up for restoring your identity like lost wages, phone calls and copying fees. And often these policies won't cover lawyer fees. And many people fail to check to see if their homeowner's policy covers identity theft protection. You could already be covered and not even know it!
-
Step 7
RENTAL CAR INSURANCE: This insurance is usually covered by your auto insurance policy or even your credit card company so before saying "yes" at the rental car counter check with your auto and credit card company first. Rental car insurance is often $15-30 extra per DAY and you could save yourself that extra cash simply by making a few calls. But beware! Rental car companies are onto you. Thrifty and Dollar rental will charge you if you get into an accident to cover the car's decreased value and the loss of the car's ability to be rented out. Your auto and credit card company may not cover these charges and you could be stuck paying in the end anyway. See if it's worth the risk before you say yes.
-
Step 8
EXTENDED WARRANTIES: This insurance is quickly getting some attention. Appliance extended warranties, home insurance warranties on plumbing, heating and more. Are they worth it? Policies often cost as much as 1/3 of your purchase price and don't often replace the specific parts that are most often likely to break. For instance: the beautiful laptop I'm using now needed a charger replacement when the cord to the charger became frayed. When I called on it, the company claimed that the warranty stated 'no external devices are covered.' Only 'devices ON the laptop that are vital to it's functioning properly.' Duh. I don't have a charger, the battery doesn't charge leaving me without a computer. How is a charger NOT vital to the computer being able to function properly? Confusing? Yes. So I now have until November to break the computer so they have to warranty everything on it. A rule of thumb? Never pay more than 20% of your purchas price of your product for an extended warranty. And those home policies claiming to fix everything in your home? They recently have come under scrutiny from every major news network station because of huge complaints from customers NOT getting anything covered. Take a look before you buy. They really aren't worth it.
Comments
cclofmead said
on 5/31/2009 Thank you for detailing the unnecessary insurance coverages! Great information to have !! 5* rec