You can get insurance on almost anything — computers, phones, trips, your identity, your credit and even home warranties! But should you?
USA TODAY reports more and more employers are offering voluntary benefits like accident and critical illness policies, pet insurance, mortgage life and disability insurance and more. They’re doing so in part to compensate for the fact that employer-paid health insurance is covering less and less these days.
Here are a few kinds of voluntary insurance policies Clark does not recommend…
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Single-issue insurance policies are generally considered a ripoff by many consumer advocates, including Clark. Examples of such policies are those that only cover one specific scenario such as mortgage life insurance, cancer insurance and accident insurance.
Mortgage life and disability insurance
Also known as ‘croak and choke insurance,’ you buy a policy that names your mortgage lender as beneficiary in the event of your death. And you get stuck paying premiums during the life of your loan that are roughly 10 times the free market rates for insurance.
They’re a common sell on electronics of all kinds, but Clark says they’re completely unnecessary. Want proof? Modern TVs only fail 3% to 4% of the time, according to Consumer Reports. Why would you pay extra for something that has a 97% likelihood of giving you no trouble at all?
If something goes wrong in your home, the warranty companies are brutally difficult to deal with. They require you to use their contractor only. That contractor may or may not come on schedule while you’re burning up in the heat of summer without AC or freezing in the dead of winter without heat, as just two examples. And then you’ve got a deductible on top of that!
Clark says home warranties are not worth the paper they’re written on!
Home wiring insurance
This kind of insurance is supposed to protect you from the hassle of outdated jacks or telephone wire in your home’s walls failing and needing replacement. But even telecom companies that sell this stuff acknowledge it’s far from a necessity in your life!
‘The fact is, your telephone wire and jacks are made to last for many years and generally don’t malfunction just because of age,’ Hawaiian Telecom notes online.
Worse yet, while most insurance is regulated at the state level, this is one kind that’s typically unregulated. So even your state’s insurance commissioner likely won’t be able to help you if a dispute arises between you and your telecom company.
Mobile phone insurance
Cell phone insurance typically runs about $120 a year. You have a deductible to meet — usually anywhere from $50 to $200 — and after paying that you often get a refurbished replacement phone. Not necessarily a new one!
Identity theft insurance
Don’t pay somewhere between $9 and $15 each month for an identity theft protection package! You can get similar protection for free.
This company is offering a $1 million free identity theft insurance policy to all customers who sign up for their absolutely free service!
Credit monitoring keeps tabs on your accounts so you’ll be alerted in the event of identity theft. But Clark says there’s a better and cheaper option out there. It’s called a credit freeze.
Chronic diseases generally aren’t covered, and insurers often won’t pay for known defects among certain breeds. And of course, no insurer covers pre-existing conditions. Watch out for a maximum limit on treatment for individual illnesses too.
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