The Kinds Of Insurance You Probably Do Not Need.
I came across this interesting article over at MSN Money that listed the 10 kinds of insurance that you probably do not need and thought I would share it you. Mind you this list is not all inclusive or exclusive; but rather a nice guideline for people new to buying insurance so you do not get taken for things you mostly do not really need.
1. Private mortgage insurance: This is something that hits about a quarter of all homebuyers. When you buy a house, the mortgage company wants to make sure it won’t be hurt too badly if you skip town without paying off the loan. Unless you can put down at least 20% of the home’s value, you may have to get PMI. The policy’s purpose is mainly to secure the lender’s investment, but by doing so, it can help you buy a home with a much smaller down payment. You’ll pay for it in the long run, however. Premiums can amount to as much as a 13th mortgage payment.
Well, that sure does not start off the article very well. First they tell you this is insurance you probably do not need, and then the writer proceeds to tell you that if you do not have 20% to put down, you do in fact need PMI. I am sure most people find this out when applying for a mortgage, and I am also sure a LOT of people need PMI with housing prices being so high. So, sure, you don’t need it; but you also cannot buy a house without it if you don’t have 20% down.
2. Service contracts: These “extended warranties” are usually worth skipping. A service contract is simply a promise to perform or pay for certain repairs or services. Service contracts often duplicate what’s provided in the standard warranty you get with a car or an appliance.
Sure, they do duplicate the coverage, but its for an additional year or whatever. However, I agree with the point; we never buy extended warranties on anything. A lot of times your credit card will double the warranty if you buy the product with their card anyway, so why pay for the same coverage? I figure that if something is going to break it will probably break within the coverage period, so we save our money for more important things.
3. Separate policies vs. riders: Buying separate policies to cover things like boats or RVs may not be your best choice. While some policies provide added liability coverage and other features, check out if supplemental coverage is already available through your existing homeowners policy.
Also check with your car insurance company, as they might offer coverage on such things as well. I know my old company covered boats, motorcycles and even (more…)
