by Nancy Osborne, COO of ERATE®
March 18, 2007 - Unfortunately there are many companies willing to market unnecessary insurance products to unknowing consumers that translate into fat profits to their bottom line. Don't fall prey to the profiteers and think twice before signing up for the following insurance options:
If your employer offers dental coverage as part of your company sponsored health plan don't hesitate to take advantage of it. However, if your employer does not offer dental coverage do not pay for dental insurance coverage on your own by taking out a separate policy as it is far less costly for you to simply cover your twice or thrice yearly cleanings yourself. Note if you have poor oral hygiene and foresee major dental work on the horizon you may want to reconsider, though you should care for your teeth not only for the sake of your stomach (that is if you like eating solid food) but for the sake of your heart as mounting evidence now suggests.
These policies are frequently pushed on consumers by credit card companies who offer to pay a monthly stipend to help cover your liabilities in the event you suffer a disability or will pay out a nominal sum if you die unexpectedly leaving outstanding loan balances to pay off. However in either case you would be far better off purchasing pure disability insurance coverage than either of these limited-type policies.
Don't waste your money on extended warranties. If you play the law of averages and assume that one item purchased over the years actually breaks down, you would have been far better off saving money on the cumulative total spent on these policies and simply replacing the singular item that broke yourself. Also replacing the item on your own would likely occur at a much quicker pace than the time frame required before the item could otherwise be replaced through the store's or manufacturer's warranty policy.
This is not technically collision insurance although it may be misrepresented as such by some rental car companies. When you are renting a vehicle and this protection is offered be sure you are not duplicating coverage you already have through your auto insurance company. A collision damage waiver is basically a guarantee that the car rental company will pay for any damages to your rented vehicle while it is in your care only this is something you likely already have covered under your personal auto insurance policy anyway. Also note that your medical insurance will likely cover injuries that are not included as part of the waiver.
Not only is this shameless, it is unnecessary. The purpose of life insurance is to replace the income of a key wage earner so that those dependent upon that income, usually a wage earner's children or spouse, can continue with a reasonable standard of living in the event a tragedy occurs. That type of insurance is of course something that would help any parent or spouse sleep better at night. However the converse of insuring the life of a child who is presumably not a wage earner and whose life cannot be replaced is both sad and useless. Better to make sure the wage earning parents and spouses are the ones with the life insurance and that they also provide medical insurance for their children and non-employed spouse.
Don't bother with this one either, get a policy of life insurance instead. A life insurance policy will protect your loved ones in the event of accidental death regardless of the altitude. Sadly this type of policy preys on impulse and fear. Note that many credit cards may offer this protection to you for free if you charge your airline ticket, in this case consider it an added and welcome temporary travel insurance policy for your loved ones.
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Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.
"I am addicted to Bloomberg TV" says Nancy.