Many of us view insurance as a necessary evil. The monthly premiums can be painful to see debited from your account. They can often total up into the thousands each year when you consider how many policies you have. You may have health, dental, auto, homeowner, life, long-term care, disability, and other policies to pay for. The benefits, however, can be substantial when you find yourself in need of them. Also, some insurance policies, such as auto, may be required. There are, however, several types of insurance policies that you should reconsider. Think about avoiding these insurance coverage options and save your money by putting it towards something more productive.
Insurance Policies You Do Not Need
There is a wide variety of insurance policies out there and many of them you do not need. For instance, private mortgage insurance is often not necessary. You may be required to pay for private mortgage insurance (PMI) if you are putting a down payment on your house that is less than 5%, or, in some cases, less than 20%. If you can avoid needing PMI and make a bigger down payment, go for it. Additionally, if you were unable to have a large down payment, but you now have 20% equity in your home, request that your lender cancel your PMI. This could save you hundreds each month.
When purchasing insurance, consider who the benefits go to should you need them. With PMI, benefits pay the lender, not you or your family, if you fail to make your mortgage payments. The same is with mortgage life insurance. If you die, this insurance pays the remaining balance on your mortgage. The money goes to your mortgage lender, not your surviving family members. Also, premiums for mortgage life insurance are usually steep. Consider having a term life insurance policy in place instead. Name your spouse, kids, or other loved one as the beneficiary.
Another kind of insurance policy to forego is flight insurance. This type of coverage pays out should you die in a plane crash, which is highly unlikely. Should this actually occur, however, the airline will generally compensate your family anyway. Either way, however, your life insurance should provide enough benefits in order to give your family the needed financial support regardless of how you pass away. Some airlines will automatically charge you for flight insurance so be sure to check to see if you were automatically billed when you purchased your ticket.
Accident death insurance is also a superfluous insurance policy to pay for. Your family will not need more money because you died in an accident as opposed to an illness. Get life insurance coverage instead.
It would also be a good idea to avoid purchasing credit insurance. Credit insurance pays off outstanding credit card balances upon your death. It is quite costly. Keep in mind that your credit card balances do not necessarily end up becoming the obligation of your family and survivors upon your death. Should you still worry about this, get term life insurance. It is less expensive and the proceeds of the policy can go towards covering outstanding debt. You should also refrain from purchasing separate life insurance policies on each of your children, paying for extended warranties, and getting unemployment insurance.
At Merlino & Gonzalez, we are here to help protect your future and that of your loved ones. We provide sound legal counsel on planning for the future and helping you develop an estate plan that meets your unique needs and circumstances. Contact us today.