Insurance Plans You Can Avoid
Chances are you’ve been pitched coverage for just about everything. Know which ones you need, and don’t be afraid to say no to the rest
At least once a week, offers for mortgage life insurance land in my mailbox. Without hesitation, these letters go straight to the shredder, as do the myriad offers for other “insurances” that I really don’t need. Name a hazard of life, no matter how trivial or unlikely, and companies will offer to insure against it. The latest trend is insurance against the costs of identity theft — which, despite public fears, are generally very low (see BW Online, 1/10/06, “The Booming Biz of ID Protection”). Advertisement
But that hasn’t stopped people from buying these dubious insurance policies. “Many people buy policies out of fear and not need,” says J. Marc Vorchheimer, founder of Integrated Financial Consulting, a fee-only planner in Nanuet, N.Y.
Insurance is necessary to protect you against financial calamities, not every small loss and hazard of life. So what you really need to have, financial experts say, is a term life insurance policy, as well as coverage for health and disability, your home, and autos. Still, marketers have come up with a slew of insurance products that, for the most part, are costly and unnecessary. With the help of a half dozen fee-only financial planners, we found a few types of policies to avoid. In general, steer clear of policies that cover only one need or incident, even if the premiums don’t cost an arm and a leg.
http://www.businessweek.com/investor/content/jan2006/pi20060113_9383.htm