I'm a firm believer in doing whatever is necessary to prepare your family for financial setbacks. However, I do think it is possible to go overboard. In today's time, some stores offer insurance policies on items they wouldn't even allow you to return a few years ago. For example, a local big-box store offers policies for DVD movies, but still doesn't allow you to return them if they are open. There are many other paid insurance policies available now that I wouldn't have dreamed possible even five years ago, and below are some that my family has decide to forgo.
Mortgage life insurance
It took some time and consideration before deciding to forgo mortgage life insurance. After all, you never know what is going to happen in the future. My husband is the main breadwinner in our household, so if something bad happened to him it would be devastating both emotionally and financially. We spoke to our insurance agent about our options and he helped us make our decision. Mortgage life insurance could cost us as much as three percent more than normal insurance, so we decided to increase my husband's life insurance policy to cover the cost of the house instead. We expect to save around $30 a month or $360 a year insuring our mortgage this way.
Cell phone insurance
Years ago, when my husband and I first signed up for a wireless phone plan, we were with a carrier that didn't offer SIM (subscriber identity module) cards. This meant that if we needed to change out our handset, we had to contact customer service for assistance. It also meant that it was harder to find replacement handsets without going through the company, and getting a new phone from them could cost hundreds of dollars, so it was important for us to have phone insurance. We've since changed our service to a carrier with SIM cards, so phone insurance just doesn't make financial sense. The insurance costs around $20 a month or $240 a year for two phones, which is a nice savings.
Computer replacement insurance
We are a very tech savvy family. We currently have four computers, and several hand-held devices like e-readers. Through the years we have had a couple hiccups with them, but overall things have worked out pretty well. Each came with at least a one-year warranty from the manufacture, and so far we've been lucky enough not to need them. Most stores also offer additional insurance policies on these type of items, but I always decline. I can't justify paying $150 or more for a warranty on something that costs $300 to $500 new.
All told, forgoing these three insurance policies saves us no less than $750 a year. I know there is always a chance that declining the extra coverage will come back to haunt me, but the savings is worth the risk to me.
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