10 kinds of insurance you (probably) don't need

10 kinds of insurance you (probably) don't need
Here are the policies that may be a bad deal and worth avoiding.

1. Private mortgage insurance: This is something that hits about a quarter of all homebuyers. When you buy a house, the mortgage company wants to make sure it won't be hurt too badly if you skip town without paying off the loan. Unless you can put down at least 20% of the home's value, you may have to get PMI. The policy's purpose is mainly to secure the lender's investment, but by doing so, it can help you buy a home with a much smaller down payment. You'll pay for it in the long run, however. Premiums can amount to as much as a 13th mortgage payment.

Once the outstanding balance on your mortgage drops below 80 percent of the original value of the home, federal law says your lender must notify you that you can cancel the insurance. If your home has appreciated rapidly, you can also apply to cancel it, but you'll probably have to pay for an appraisal ($300 to $400) to prove your point.

2. Service contracts: These "extended warranties" are usually worth skipping. A service contract is simply a promise to perform or pay for certain repairs or services. Service contracts often duplicate what's provided in the standard warranty you get with a car or an appliance. Read your regular warranty carefully. Then compare it to the service contract. Sometimes, you can purchase service contracts later, when the original warranty expires.

3. Separate policies vs. riders: Buying separate policies to cover things like boats or RVs may not be your best choice. While some policies provide added liability coverage and other features, check out if supplemental coverage is already available through your existing homeowners policy.
A major reason is cost. Think of it as buying in bulk. When you add a "rider" to an existing policy, it usually costs less than trying to buy a whole new policy. Also, many of these "things that move" are already covered by your home insurance, albeit at less-than-ideal levels.

4. Flight insurance: This coverage is pretty cheap. It's a nice way to impress your mate, but a bad bet, thankfully. According to some statisticians, you could fly on a major airline every day for 26,000 years before you'd be involved in a plane crash. Even then, the odds are that you'd survive that crash. Besides, you may already have flight insurance, if you purchased your plane ticket with a credit card. Some credit card companies give you $100,000 in coverage just for charging your ticket on their card.

5. Credit insurance: This insurance is often pushed on consumers. The most important thing to remember about credit insurance is that a lender cannot make you buy it.
While there are several variations (including credit life insurance, credit health or disability insurance and credit unemployment insurance), they all do the same thing: They pay the lender if you can't. So why would you want to pass on credit insurance?

Well, for one reason, you might have enough life insurance, disability insurance or assets to cover your debts. Besides, you might be able to buy a term life insurance policy for less, and the payout would be higher. If a 30-year-old Oregon woman in good health takes out a five-year, $5,000 loan, credit insurance would cost $112.50. The cost of the credit insurance is added to the total loan amount. If this same woman already had a $50,000 term life insurance policy, and tacked on another $5,000 to cover the loan, it would add less than $15 to what she already pays for the life insurance policy over the five-year loan period.
Even if she buys a new term life policy, it would cost her about $500 for five years of at least $50,000 in coverage (that's usually the minimum coverage available). And remember, the credit insurance policy would only pay the lender whatever is owed.

Credit insurance is also a big moneymaker for insurance companies. In Louisiana, for example, insurers and lenders keep 79 cents of every dollar that consumers pay in premiums. Even in the best states the insurance companies keep about 40 cents of every dollar.

6. Short-term, cash value life insurance: If you don't hold onto them long enough, cash-value life insurance policies are a waste of money. Cash-value life insurance theoretically offers both a death benefit (the money paid to your heirs when you die) and a return on investment. Your equity in the policy -- the cash value -- builds up over the years, and you can borrow against it or simply stop paying on a policy and let the annual dividends keep the policy in force. While your survivors will still get the death benefit, these policies cost you money in big chunks in the first few years.

According to a study by the Consumer Federation of America, it takes five years before one of these policies shows a positive return. And even then, that return is extremely small. Even after 10 years, the average return is only about 2%. All this is due to brokers' commissions and other fees paid in the beginning of the policy's life.

If you're looking for life insurance coverage for a short period, term life is your best bet. The premiums are much lower, and your heirs will still get the death benefit.

7. Life insurance for children: This insurance offers a big death benefit, but kids don't have debts or dependents. If you're thinking that a cash-value kid's life insurance policy would be a good way to save for his or her college education, you could do better elsewhere.

8. Mortgage insurance: It's more expensive than it's worth. Besides, you could do better with another policy -- one that you might already have. These policies are designed to make your mortgage payments if you die or become disabled. If you're worried about burdening your heirs with mortgage payments, you'd be better off buying straight life insurance. Adding onto your existing life insurance policy is less expensive than mortgage life.

9. Cancer insurance: If you look closely at what you get, you'll realize there's a better way to protect yourself in the event you get sick: health insurance. Some cancer insurance policies promise to refund your premiums every 10 years if you've had no cancer. Not a bad deal -- if you're the insurance company.

A study done by the federal General Accounting Office in 1994 found that the largest companies selling plans -- that cover only hospital stays or diseases like cancer -- paid out as little as 35% of the premiums they took in. Some states set payout targets of 75% or more for other policies. While $400 a year may not seem like too much to spend for peace of mind, it's the narrow coverage provided by cancer insurance that makes it a bad deal. They'll cover you if you get cancer, but some policies won't pay for cancer treatments until several years after you've bought the policy. And skin cancer, probably the most common form of cancer, is often excluded.

10. Short-term medical coverage: There will be arguments a-plenty here. Often, this coverage is offered to those who leave one job for another. Under the federal COBRA law, your old insurance policy can "follow" you for about 18 months after you leave, but you have to pay the whole premium. (Here's where you find out just how much your employer's been kicking in for your insurance coverage.) You don't have to pay the premiums until 100 days after your last day on the payroll. But let's say you're single, run three miles a day, don't smoke and are terrifically healthy. You may decide that the cost of COBRA coverage is too high for the low risk of developing a medical problem before you take your next job. So, don't take the coverage. But, if you have a family, you may conclude that the risk of not having any coverage is too great.

Taken from http://articles.moneycentral.msn.com/Insurance/AvoidRipoffs/10kindsOfInsuranceYouProbablyDontNeed.aspx

Is a insurance premium became a burden to u?

Is a insurance premium became a burden to u?

A GUIDE TO HEALTH INSURANCE AND PRESCRIPTION DRUGS:
A Safety Net for Elderly Pitfalls

by Jacob Clark and Ryland Deinert

This article will cover many facets in health insurance and prescription drugs that the elderly will face when buying and relying on plans for protection both physically and financially. The areas to be covered consist of (1) understanding your needs, (2) the available health plans, (3) common pitfalls, (4) regulation of health plans, and (5) what you need to know about prescriptions drugs. This guide is not the bible on health insurance plans and prescription drugs but rather a friendly guide full of suggestions, information, and problems regarding these issues. We hope it is helpful and wish you the best of luck in obtaining a plan that fits your present and future needs.

Understanding What You Need
The basic and most important question you should ask yourself is, “why do I need insurance?” To understand this you should know what is meant by the word insurance. “Insurance is a contract whereby one undertakes to indemnify another or to pay or to provide a specific or determinable amount or benefit upon determinable contingencies.”[1] In other words insurance provides protection. First, it allows the purchaser to protect themselves from liability, loss, or damage. It also allows the purchaser to provide for themselves under certain policies.
For our purposes this section we will mainly focus on benefits the purchaser expects to receive. Now that you have an understanding of insurance the next question is why do you need it? Simple, when you attain retirement age health insurance will no longer be paid for in full or in part by an employer, assuming you retire.[2] You will be come the sole provider for your own coverage, unless you qualify for Medicaid and/or Medicare.

First, let’s ask ourselves some basic questions to see if we need health insurance:

1) What illnesses, diseases, or ailments have I had or currently have?
2) What is my current state of health?
3) Do I work out 3 or more times a week?
4) Do I eat healthy?
5) What common health problems would my family history reveal?
6) What common health problems do my friends have?

Now that we have the answers to those questions there should be little doubt as to whether or not you need health insurance. If there is still any doubt let us consider the premiums versus the medical costs. A monthly premium could run anywhere from $50.00-$800.00 a month.[3] Now that is a little scary, but remember the higher number is based on serious health problems that you currently have or have had. Hopefully these figures have not sent you into a cardiac arrest on the spot. Now consider the numbers the hospitals and doctors will charge you:

3 day stay in the hospital for bacterial pneumonia (common health problem for the elderly) = $5000.00+.
MRI = $800.00-1400.00.
X-ray (broken bones are very common and you often get more than one) = $200.00+.
Doctor’s visit = $50.00+. (This does not include what the doctor will prescribe or test you for).
Shots = $15.00+.
IV = $200-400.00

These are just a few of the reasons you might want to have health insurance. One doctor’s visit could easily eat up a years worth of premiums.

Next, let us assume you plan to retire at the age of 62 and at the same time you apply for early social security benefits.[4] You will not qualify for Medicare because you are not 65 years of age and on social security (or on Railroad Retirement benefits). However, if you are disabled and on social security then you may qualify for benefits.[5] Medicaid might be an avenue to pursue depending if you are financially challenged. Medicaid bases your qualification on how your financial situation compares to the poverty level.

Looking beyond these government programs your options are many. There are two types of plans, individual and group. To let you know ahead of time individual health plans tend to have much higher premiums. The reason that individual plans are more expensive is based on the sharing of risks. Insurance companies base your premiums on the risks you present versus the amount they can collect as premiums and make a profit off of. Individual plans consider your health only when writing a policy, contrary to group plans. No one other than the insurance company is sharing the risk (a second insurance company may underwrite the first insurance companies policy, thus sharing the risk between the companies) that one day you will need medical care. An actuary[6] (a fancy insurance word for mathematician) will take studies of people in similar stages of life and that have similar health status. Actuaries use that percentage along with other personal information you have provided to evaluate whether the amount of risk you create for the insurance company will be small or great. From this assessment your premiums are calculated.

Group plans on the other hand use a different process. The insurance company places you in a plan with other similar situated people wherein you will share the risk amongst each other. This is going to be a less expensive plan for you because of the sharing but it can also be more cumbersome regarding the limits and exclusions in coverage. To better explain risk sharing in a group plan lets look at it in a simpler light using the following scenario. Every Monday a restaurant has a special offer where you can buy one dinner for yourself and additional dinners for your friends at half-off (limit a of 10 persons per ticket). An individual plan would be like going to the restaurant and eating by yourself at the price of $7.50. A group plan would be like taking nine additional friends to dinner and of course share the cost. The total cost is $41.25 between the ten of you but your share is $4.12. This is, in essence, risk sharing in the insurance world of group and individual health plans. Again, I would like to remind you that individual plans are much more expensive, although there are many more advantages to having an individual plan instead of a group plan. Your needs and financial situation will likely dictate what type of plan you will need.

Read more http://www.usd.edu/elderlaw/student_papers_f2003/a_guide_to_health_insurance_and.htm

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