Types of Insurance Most People Skip
An insurance policy is generally not the most important purchase for most people. In a way, you’re paying money for a service and hoping you won’t have to use it. But being a responsible adult means protecting your family, possessions, and property, and insurance is a big piece of that puzzle.
Below are five of the most common types of insurance you can buy online.
#1. Vacation Insurance
If you decide to take extra precautions due to unforeseen events that lead to a cancellation or interruption of your trip.
- economic issues (i.e. the coronavirus)
- weather cancellations
- company goes out of business
- death or illness
A vacation insurance policy will reimburse you for the lost money. It also reimburses you even for lost luggage, an emergency medical situation or expenses due to delays in the route
Why you should get it: If the current economic situation is volatile, such as the Coronavirus or you have a medical condition, vacation insurance is well worth the extra expense. It is also a good idea for adventure travel, where injuries are more likely, or for overseas destinations.
Timing: In the event of one of the situations listed above, vacation insurance means you won’t have to pay the full cost up front. The most relevant use-case is if you are planning a to take the vacation in 3+ months. And if you’re planning a trip far in advance you can insure only the initial deposit. As you make additional trip payments, you an increase the coverage accordingly.
What to avoid: Travel insurance coverage is not offered by a licensed seller or regulated by the state in which they’re sold. Sometimes it is available through the airline.
#2. Personal Property Insurance
This type of policy can easily be an add-on to your current home insurance policy. Like renters insurance, personal property is just like it says – it protects your possessions such as expensive jewelry, sports memorabilia, musical instruments, fine art or the antique grandfather clock. While most homeowner’s insurance provides coverage for losses in some instances (fire or theft), it’s limited and subject to a deductible, whereas personal property policies may have no deductible.
Why you should get it: If own expensive items it makes sense to insure them, especially if their appraised value is $1000 or more. In the event of fire or theft, you will be glad that you have personal property insurance for it.
Timing: You can add items onto your policy as you acquire them.
What to avoid: higher premiums if you want to get the replacement value of an item instead of its actual cash value at the time of loss (since most items depreciate).
#3. Long-Term Care Insurance
An insurance policy can be used to cover daily care too. A long-term care policy goes beyond what is covered by basic health insurance, namely, nursing home, assisted living care, or home health care expenses. When researching options, consider factors such as daily benefit (which limits the max available to pay for LT care), length of the policy coverage (a five year plan is most popular), and waiting time (how long before the benefit comes into effect).
Why you should get it: planning for the future is important to you, and you have the funds to do so. According to the Dept. of Health and Human Services, nearly 70% of people over age 65 will need long-term care service. While it’s cheaper to buy when you’re younger in the long run (vs. between 40 and 50), buying long-term care insurance when you’re in good health means you’ll get the policy at a much lower premium.
Timing: If family health history is a factor, such as heart disease or cancer, purchasing coverage sooner rather than later is wise. Most pre-existing health conditions make it very challenging to get affordable coverage.
What to avoid: Most long-term care insurance policies have a fixed-rate, but beware of those that are adjustable rate. It’s also smart to check now whether the policy pays the facility directly or you’ll be required to handle expenses out of pocket and wait to be reimbursed.
#4. Identity Theft Insurance
When an identity is stolen, the expenses for paperwork and legal fees to restore bank accounts and clear your name can be pricey. Identity restoration insurance provides reimbursement for refiling applications, correcting your credit report, attorney fees, etc.
Why you should get it: Identity theft can happen to anyone. Sometimes your information intercepted on the way to the mailbox and other times it is found online. Whatever the case might be, no one is fully safe from identity theft. However, if you regularly check your credit score by requesting a free annual credit report you are much less likely to need this type of policy.
Timing: Identity protection policy can be taken out at any time. Consumer Reports estimates the cost of identity theft insurance to be $50 to $100 per year.
What to avoid: Make sure to read the fine print. Identity theft insurance will only reimburse the costs to recover from identity theft. It does not cover any monetary loss caused by the theft.
#5. Car Rental Insurance
With policy options such as collision damage waiver, liability and personal accident insurance, car rental agreements have an endless list of possibilities that will run up the cost.
Why you should get it: if you plan on adding authorized drivers (i.e. family members) who aren’t on your plan, or your personal auto insurance coverage is limited. If something happens to your rental car or you file a claim with your existing insurance company, your premium may increase and end up costing you more money in the long run. However, if you already have coverage, it is usually okay to skip the car rental insurance.
Some credit cards also include secondary coverage that will supplement your personal auto insurance. Be sure to know which card offers this and that you use that card when renting.
Timing: You can decide whether to purchase at the rental counter.
What to avoid: Coverage if traveling for business because your personal auto insurance may not apply. Make sure to check with your insurer beforehand.
Other Types Of Insurance Most People Skip
Consider adding separate flood insurance to your policy. If you reside in a flood zone, it’s a no-brainer to buy flood insurance. Most people assume that flood damage is covered under their standard home insurance policy and are shocked if the worst-case scenario happens. You can check the FEMA Website to check if your home is in a flood zone.
Even though your landlord has home insurance, their policy will not protect your possessions from theft or destruction. Their policy also doesn’t cover your expenses if you have to move out due to a mice or termite infestation.
For example, there’s a fire at your apartment and you lose your possessions and need to find another apartment, renters insurance will reimburse you.
Basic Life Insurance
If you have a spouse or children, a term life insurance policy will help cover living expenses should anything happen to you or your spouse. Policies can be as cheap as $18/month.