You’ve seen the commercials, right? A certain duck or a certain broken skier? Well, some of those companies advertise important insurances but some...not so much!In fact, they’re gimmicks! They are really bad insurance products you should run from.
This week I'm going to explain five types of these gimmick insurances. Before we dive in, just let me remind you, I am not licensed nor do I sell any financial products, including insurance. I only have your best interest at heart and I have nothing to gain or lose no matter your financial decision on these matters. Okay, let's begin!
Life Insurance for Kids
Kids do not need life insurance! Now, this isn't a fun topic, I know, but it is an important one. If you want to be sure you have something in place to cover funeral expenses in the event that, God forbid, something happened to your child, then make sure you have a rider on your existing life insurance policy. You can learn more about what exact amounts you should have by watching my video, “What Kind of Life Insurance Should I Have?” Because they don't generate an income kids, themselves, do not need their own separate policy. A rider on an existing policy, with enough for burial and funeral arrangements, is sufficient. We’re talking a $10,000 to $15,000 rider on your policy for each child. If you have a child that's a profitable model or something that's a different story. Get that kiddo covered!
This is a gimmick. You know what else covers cancer? Health insurance! If you have a good quality insurance policy then you don’t have to worry about cancer costs. This is just another bad insurance. Now, if you are not able to qualify for a good insurance policy then you probably won’t be able to qualify for a cancer insurance policy either. Make sure you understand what your insurance covers and what it doesn't.
Need help understanding your medical insurance? It's what I used to do before this and the most complicated area of budgeting. I'd be happy to help. Let's chat.
What this is really is mortgage protection. It pays off your existing mortgage in the instance you die. Now, let me note, that having the proper amount of life insurance is important because one of its roles is to pay off an existing mortgage if you pass away. That is one of those debts you leave behind, so the proper level of term life insurance covers this. And, that is important! Remember the video I mentioned above. It explains the proper amounts you'll need for that life insurance policy. It is also important to note that a quality term life insurance policy is a better option because it typically costs less! The value of mortgage insurance goes down as the balance of your mortgage goes down, so it is not all it’s cracked up to be.
Accidental Death & Dismemberment (AD&D)
The concept here is, if you die by accident, your family gets twice the benefit. Great, okay?! But, your family’s financial needs don’t change and you can't take it with you so... This is again where term life insurance takes care of that need. You don't need to pay for double coverage! Just one more bad insurance. So many gimmicks. ????
This one always cracks me up. Basically, they are building this idea that you can only maintain your lifestyle after an accident if you have accident insurance. Well, what about a good old-fashioned emergency fund?! An emergency fund will take care of those accidents. You are better off saving the money yourself and putting that premium towards that good, old-fashioned emergency fund and once it's full towards something with a better return! With the emergency fund, you can take care of a job loss, short-term disability or those inevitable accidents. So, don’t buy into accident insurance. In fact, if you are having enough accidents to warrant accident insurance, you might want to get something else checked out. You shouldn’t be having that many accidents! So, stay away from any and all of this bad insurance — the five gimmick insurances you need to avoid in order to keep your wallet heavy and your heart light.
Question: Did you find this helpful to avoid those bad gimmick insurances? Let me know in the comments.