Insurance Features That You Shouldn't Get
Insurance is a very important part of financial planning, and it is usually practical to get enough insurance to cover financial losses. However, it is usually impractical to be over insured, and even worse to buy insurance that you don't need. Many will agree that it is wise to buy life insurance to provide for loved ones in the event of a premature death, home and auto insurance help us protect our assets and medical insurance to cover healthcare expenses. The question then becomes, 'which type of insurance should you consider ignoring?' Life Insurance for Minor Children
The primary reason for obtaining life insurance is to replace the income of the decedent, and/or to provide a financial resource for surviving family members. As a result, life insurance is usually recommended and suitable for individuals who have others relying on them for financial security. Obviously, this would not be the case for your minor child, as, if he or she dies, he or she would not be providing financial support for you and other family members. Instead of buying life insurance for a minor child, consider using the amount earmarked for the premium to fund an education account, which can be transferred to a sibling or another eligible family member in the event of the child's death.

Natural Disaster Insurance
One of the major concerns for homeowners is trying to protect their homes, which is usually their largest and most expensive asset. As a result, some may feel the need to purchase natural disaster insurance. While this may be practical if you live in an area prone to natural disasters, you may be wasting your money if you live in an area where there is little to no chance of your house being destroyed by a natural disaster. Consider doing some research about the history of natural disasters in your area. If there are no historical occurrences, then chances are slim that you will have that experience.

Extended Warranties
Extended warranties are used to replace appliances and the like. However, such insurance is usually impractical. Depending on how much the item costs, you might end up spending as much as you did for the appliance to have it insured, and more often than not, the cost of the insurance is more than it would cost to get the item repaired. Most appliances come with a manufacturer's warranty, and if yours does not, consider purchasing the item with a credit card that provides insurance for such items. If you planned to pay cash for the item, you can avoid interest charges by paying off the credit balance immediately.

Mortgage Life Insurance
If you own a home, then it is likely that you have been bombarded with offers to sell you mortgage life insurance, which promises to pay off your mortgage balance in the event of your death. This may sound good at first, but consider that the lender is the beneficiary. You may be better of spending the same amount for a term life insurance plan which could leave your loved ones with enough to pay off the mortgage on your home and still have some left over.

SEE: 15 Insurance Policies You Don't Need

The Bottom Line
One of the key factors for making wise decisions when it comes to insurance is to look at it as an investment as opposed to a cost of living expense. When you invest, the objective is usually to get back more than what you put in. With a cost of living expense, there is usually very little expectation for any return or earnings on the amount spent. If you are faced with the decision to purchase an insurance policy, consider whether the amount that you will spend on premiums would be worth the risk that you want to cover, and whether it would be more cost effective to replace the item if it is damaged, or explore other means of protection.

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