Despite how much we might end up paying for it, we all know that insurance is important and a necessary expense in many different areas of life. However, it’s also good to remember that while insurance is important, we shouldn’t get into the habit of overspending on it.
The concept of insurance is that you pay a premium to a company that will offer you financial protection or support in the event that something is lost or damaged. For example, you pay a car insurance premium and if you’re in an accident, the insurance company will cover some of those costs. It’s essentially a form of protection that gives you peace of mind knowing that you’ll receive some support if something bad were to happen.
But could you be paying a little too much for certain types of insurance that just aren’t necessary? Let’s take a look at some of the more useful forms of insurance and some that you should probably stop paying for.
Is insurance necessary?
Before we start, it’s important to mention compulsory insurance. These are types of insurance that are necessary for certain things in life in order to be legally eligible to do something. For example, car insurance is necessary to get your car on the road, and worker’s compensation is compulsory insurance if you’re looking to start a business.
These are the most important types of insurance around since they’re a must if you want to legally be able to do something. However, if you’re unsure whether or not you need a certain type of insurance, it’s best to speak with an expert to ensure you don’t break any laws.
The types of insurance that you should consider
So let’s take a look at some of the more important types of insurance that you should be paying for. Keep in mind that some of these are considered compulsory.
- Life insurance is essential because, as unfortunate as it is, death is very expensive. Settling an estate, planning a funeral, and paying for all of the associated costs can easily eat into your savings. However, a life insurance policy can help split those costs up and make it more manageable.
- Auto insurance is compulsory insurance that you’re required to have if you want to drive. Driving without auto insurance is against the law because neither the driver nor the vehicle are protected from accidents and collisions. If you’re a driver, then you absolutely need auto insurance. You’ll pay a different premium depending on your driving history and your vehicle, meaning you’ll pay less if you can show that you’re a reliable driver.
- Health insurance is needed to cover unexpected health care costs. Everything we do in a hospital needs to be paid for and it’s usually our insurance that will cover it. If you don’t have insurance, then you’ll be expected to pay the ridiculous prices that hospitals charge for everything from routine visits to medication.
- Disability insurance is a blanket term that covers many different types of disability protection. Disability insurance is usually associated with health insurance and protects us against the inability to work and do certain activities as a result of an injury that has left us disabled. It applies to both short and long-term disabilities.
- Homeowners insurance is another important type of insurance that you should certainly invest in. In order to maintain your home and cover the costs of damage from adverse weather conditions and other dangers, you’ll need homeowners insurance. For example, if your home is flooded then you’ll need to hire a service to help you get rid of the water and also inspect and repair potential damage. This can cost a lot of money and is problematic when it’s caused by something like flooding or heavy rain. In this case, homeowners insurance can save you a lot of money and make it much easier to cope with the costs.
These are the most important types of insurance that you should be looking into. Do your research with these types of insurance and speak with various companies to see what kind of offers they have. It’s also a good idea to look at each individual insurance company’s policies to see what they’ll cover and how much financial support they can offer. Remember that insurance costs can change from year to year, so it’s always a good idea to reevaluate your costs to see how much you could save and if you need more cover.
Insurance that you probably don’t need
We’ve mentioned many different types of insurance that are important for peace of mind, but there are also a few insurance policies you don’t need. Some of these are unnecessary because they’re not used very often, but they might also be fairly pointless because they don’t really offer additional peace of mind. Many of these insurance products are commonly sold and are often added on when you make a purchase. In reality, they’re not very useful and are just an extra way for companies to get money from you.
With that said, some of these types of insurance may be more suitable for certain people. At the end of the day, if the type of insurance gives you peace of mind then there’s no problem paying for it as long as you can afford it.
- An extended warranty is one of the least useful types of insurance to get. As a consumer, it might make sense to protect your purchase with an extended warranty policy, but the reality is that they’re statistically not used very often. If you purchase a product from a reputable brand, then it’s very unlikely that the product is just going to break as soon as you buy it. Many of these brands offer built-in warranties from the manufacturer, and some of them will even offer support, replacements, and repairs if you buy directly from the brand. This makes an extended warranty a fairly pointless policy, but if it does give you peace of mind and you can afford it, then you might want to consider it.
- Rental car insurance is another rather pointless insurance policy because it covers additional costs involved with car rentals. It can be useful if you’re renting a car on a regular basis, but it’s usually a product that is added on to a car rental fee to squeeze a bit more money out of customers.
- Flight insurance can offer some people additional peace of mind, but airline accidents are pretty rare (statistically speaking) and if something were to happen, it would likely be covered by your life insurance policy already. This is a product that is occasionally added to flights and may even cover things like lost or stolen luggage. Getting it for those reasons can be meaningful, but you shouldn’t worry too much about paying for it to cover airline accidents.
Save your money and be smarter about insurance
Insurance premiums can be costly. They’re a recurring expense that can easily eat into your budget and ultimately won’t be worth it in the long run. While there are some very important types of insurance that you should consider investing in, there are also some forms of insurance that are sold as a way to get more money from consumers through “what if” situations and even scare tactics. It’s a good idea to be aware of these types of insurance products so you can avoid them and save your money.