Obtaining the right insurance is vital to your financial security. Having life, health, disability, and long-term care insurance can help you weather some financial storms, but you don’t want to overdo it.
Though you can benefit from any type of insurance, says Jeanne Salvatore, spokesperson for the Insurance Information Institute, “you want to look at how much the insurance costs and what you’re going to get back under what circumstances. Then you want to see whether it’s duplicative of anything else you might have.”
Here are some specialty policies you might want to think twice about before opening up your wallet:
What it Covers: Policies typically cover one or more of the following: trip cancellation reimbursement, baggage or personal effects, emergency medical assistance, and accidental death.
What to Consider: It might make sense if you’re going on an expensive vacation or one where there’s a greater than normal risk of injury. It might also be worth considering if you’re headed to an area that’s prone to natural disasters since this insurance generally provides assistance in the event of a hurricane or other calamity. But there’s little risk, “If you’re going on vacation in an area not known for disasters and you’re paying with frequent flier miles for your airfare, and your hotel has a 24-hour cancellation [policy],” Salvatore says. Moreover, some of the benefits offered by such policies might already be covered by your credit cards or general health insurance policy.
Specific Disease or Health Condition Insurance
What it Covers: Cancer insurance policies, as well as those for conditions such as strokes or heart attacks, generally pay a cash benefit to policyholders who get that particular disease or illness. “If you have a stroke you might get $50,000,” says Lee V. Bethel, president of Alexandria, Virginia-based Comprehensive Benefit Services Inc.
What to Consider: This policy may not cover certain types of expenses, such as home care, and may have restrictions like a waiting period before benefits kick in. Furthermore, policyholders won’t receive coverage for the condition if it was diagnosed before the policy was purchased. It’s more important to make sure you have the best health insurance policy you can afford, advises the National Association of Insurance Commissioners, although some high-risk consumers might benefit from the peace of mind this coverage may provide.
Identity Theft Insurance
What it Covers: While credit card agreements generally protect consumers from having to pay for fraudulent charges if their identities are stolen, identity theft insurance goes the extra mile and gives consumers money to help them resolve financial difficulties resulting from the theft. “It pays for two things,” says Salvatore. “It helps you with assistance in resolving the problem and out-of-pocket expenses that you might incur.” Some of the covered expenses might include reimbursement for phone calls, mailing costs, and attorney’s fees.
What to Consider: Identity theft insurance is very inexpensive, ranging from $25 to $50 per year for $15,000 to $25,000 in coverage, according to the Insurance Information Institute. That might not seem like a lot, but before you buy make sure your homeowner’s insurance policy doesn’t already include it.