Insurance products such as health insurance, life insurance and homeowners or renters insurance almost always make sense to buy. Beyond these large, popular categories of insurance lie many other types of policies that only a few people need or that are usually a poor use of your money. (For more insight, see 15 Insurance Policies You Don't Need and Unique Insurance Policies You Should Consider.)
Critical Illness Insurance (additional source: http://www.marketwatch.com/story/is-critical-illness-insurance-worth-the...)
Critical illness insurance covers a number of serious illnesses named in the policy. These illnesses might include stroke, heart attack, blindness, cancer, multiple sclerosis, Alzheimer’s and more. The policy pays a lump sum if you meet the policy’s definition of being diagnosed with one of the policy’s named illnesses. You can then use that money for whatever you need, such as paying your living expenses or medical expenses.
Unlike disability income insurance, you don’t need to be employed to qualify for critical illness insurance, and unlike health insurance, you can use the money to pay for any treatment you want or to pay for deductibles and coinsurance on treatments your health insurance is covering.
You can buy an individual critical illness policy or purchase one through your employer if it’s offered as part of your benefits package. Critical illness coverage can also be added to a life insurance policy.
You can choose the total amount of coverage the policy offers and the number of years you want to be covered for. Coverage is affordable; the big questions are whether it will pay out when you need it and whether it’s necessary if you have health insurance and disability income insurance. Emergency funds, flexible spending accounts and health savings accounts can also help fund your expenses if you become critically ill. Those with inadequate health or disability insurance and savings may benefit from critical illness insurance. (Learn more in Critical Illness Insurance: Get Paid If You Get Sick.)
Kidnap insurance compensates the policy holder for expenses associated with kidnapping, such as ransom, loss of income, medical expenses, psychiatric counseling and accidental death. Individuals employed by or associated with multinational firms, media organizations, universities and nongovernmental organizations that regularly spend time in countries with a high kidnapping risk might purchase kidnap insurance, as might high-profile, affluent individuals. Policyholders are often required to keep their coverage a secret to avoid the potential for fraudulent claims. (Learn more in Kidnap & Ransom Insurance: Who Needs It and A Guide to Kidnap & Ransom Insurance.)
Identity Theft Insurance (sources: http://www.iii.org/article/identity-theft-insurance, https://www.zanderins.com/idtheft2, https://www.statefarm.com/insurance/identity-restoration)
Identity theft insurance or an identity fraud reimbursement program may be included with your homeowners or renters insurance policy or available for an additional premium. You can also buy a separate policy from a company that specializes in identity theft insurance.
This insurance covers the costs associated with cleaning up the mess after your identity is stolen, such as lost wages, notary fees, credit report fees and certified mailing costs. Some policies will cover attorney fees, and some companies will handle much of the identity theft resolution process for you by working with credit bureaus and creditors to get inaccurate reports and fraudulent charges removed from your accounts. These policies may also provide ongoing identity monitoring that can help you learn about an identity theft before it spirals out of control. This insurance may or may not be worth it depending on the details of the specific policy and how much identity monitoring you do on your own. (Learn more in Identity Theft Protection Services: Worth Having?, Identity Theft: How Much Should You Worry? and Avoid Becoming an Identity Thief’s Next Victim.)
Credit Insurance (Sources:
Credit insurance is a type of insurance you can purchase from a lender or a separate insurance company to make your loan payments in case of your death, disability or job loss. It can be used to make payments on an auto loan, mortgage, credit card or other type of line of credit or installment loan. Credit insurance can help protect your credit score if your financial situation changes by preventing you from defaulting on a payment. It can also help protect the credit score and finances of a coborrower or cosigner if you become unable to make loan payments.
This type of insurance may be unnecessary if you have life insurance or disability insurance. Additionally, it has been criticized for being expensive for the amount of coverage it provides, so if you don’t have life or disability insurance, the money you might put toward credit insurance could instead be put toward one of those policies – a small one, whatever you can afford. Another thing that can make credit insurance expensive is that a lender may roll it into a loan, meaning you not only pay premiums but also interest on those premiums.
For a few dollars a month, cell phone insurance can be an attractive proposition to protect a brand new phone that costs several hundred dollars. But this insurance may not be as good of a deal as it appears because of the deductible you will pay each time you file a claim and the limit on the number of claims and total value of claims you can file per year. You can purchase this insurance directly from your cell phone carrier or from a third party insurance company. Third-party policies may cover device malfunction and damage only, while carrier policies tend to additionally cover loss and theft.
Cell phone insurance may or may not be a good value for you depending on what it covers and the type of damage or loss you expect to happen to your phone. In addition, you may get a refurbished phone rather than a new phone if your phone needs to be replaced under the policy. Renters insurance, homeowners insurance or your credit card may already provide some protection against a lost, stolen or malfunctioning phone.
Pet insurance can be a good choice for pet owners of breeds that are known to experience health problems and for pet owners who treat their pets the same way they treat any other beloved family member when it comes to getting medical care. Self-insuring might seem like a good idea when you have a healthy pet whose only medical expenses are annual veterinary checkups. But it can quickly seem like a terrible idea when your pet becomes severely ill and requires hospitalization to have any hope of pulling through. Pets, like people, can require pricey procedures like echocardiograms, ultrasounds, intensive care, surgery, cancer treatment and more.
Many companies offer pet insurance; the monthly premiums are based on the type of pet, your pet’s age and your pet’s breed. Your pet’s medical history does not affect the premiums, but preexisting conditions are not covered. Some companies allow you to purchase insurance on a pet of any age; others have age cutoffs, such as 10 years old. Policies will cover a certain percentage of a pet’s medical bills per policy year after the policyholder meets a deductible. Some policies have annual or lifetime limits on total payouts; others do not. Some policies also cover routine care if you add coverage for a pet wellness plan. (Learn more in How Does Pet Insurance Work? and What Pet Insurance Covers.)
Congratulations! You’ve reached the end of our insurance tutorial. You are now a much better-educated insurance consumer and are well on the way to purchasing the coverage you need (and avoiding coverage you don’t need) to ensure your financial security. Go on and read the conclusion, where we’ll summarize the key points from the tutorial to help you reinforce what you’ve just learned.
(Learn about other types of insurance not covered in this tutorial in Extortion Insurance: Do You Need It?, Why You Don’t Need Mortgage Protection Life Insurance, Assure Insurance: Should You Buy Unemployment Benefits?, Is Travel Insurance a Good Idea? and Why is accidental life insurance so inexpensive?)
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