PMI (private mortgage insurance) is an insurance policy that protects the lender against loss when lending to a high-risk borrower. But, the borrower (YOU) pays for this insurance but derives no benefit from it. There are several ways to avoid paying for this. Put down at least 20% of the home’s value. If you cannot do this, alternatively, you can put down 10% and take out two loans, one for 80% of the sale price and one for 10%. Just a heads up though, interest rates can prevent the economics of this maneuver from working in your favor.
Extended Warranties are considered a means of insurance. If a product breaks or malfunctions, it will pay for the cost of replacement during the warranty period. But, if you purchase a reputable, brand-name product, you can be fairly certain it will work past the extended warranty period. Consider viewing consumer reports and reviews on the web prior to purchasing a pricey item to know it’s longevity.
Automobile Collision is mandatory if there is a loan out on a car. However, if the car is paid off, it is optional. Consider this, if you have enough money in the bank to cover the cost of a new car, collision may be an unnecessary expense. Particularly if you are driving an old car. Because cars depreciate quickly, they are only worth a fraction of their purchase price by the time the loan is paid in full. Do your homework and know your car’s replacement value before considering this option.
Rental Car Insurance is offered as an additional coverage for the cost of car rentals. But in reality, most people rarely rent a car and when they do, the cost is relatively low.
Car Rental Damage Insurance is in most cases already covered on your auto policy. Check BEFORE you rent a vehicle.
Flight Insurance is completely unnecessary. Airline accidents are rare and your life insurance policy should already provide the coverage in the event of a catastrophe.
Mortgage Life Insurance will pay off your house in the event of your death. Rather than add another policy (bill) it makes more sense to go with a term life policy instead. It will provide you with enough money to pay off the mortgage AND to cover other expenses as well.
Accidental-Death Insurance are often fraught with stipulations that make them difficult to collect on, so unless you are accident prone, skip the hassles and get life insurance instead.
If you ever have any questions about insurance such as what to buy, what not buy, what limits do you need, etc., don’t hesitate to contact your local insurance agent for helpful and knowledgeable advice.