Insurance is designed to protect from financial burdens and provide peace of mind. The sad reality, however, is that not all insurance products provide actual value. Many programs, often sold very aggressively, are planned more for the bottom line of an insurance company than to protect the policyholder. These are typically labeled “junk insurance” products. Learning the most common varieties will better enable consumers to avoid spending money unnecessarily and make informed choices about their insurance coverage.

Life Insurance Add-Ons

Most life insurance contracts come with additional features like accidental death benefits, critical illness riders, or premium waiver benefits. Although these additional features seem attractive, most of them entail very high charges with little value to the policyholder. Most of the time, the standard policy cover comes with adequate benefits, thus making the additional features unnecessary. Term life insurance can prove to be a good choice for someone with limited insurance requirements because it offers standard protection at a cheaper rate.

Extended Warranty Plans

Retailers provide extended warranties for electronics, appliances, and consumer items. These are intended to offer protection after the factory warranty expires, but in fact, offer little value. This is because most items are not likely to fail after the initial warranty, and what can happen is usually protected by consumer safeguards or the standard warranty. It costs a lot of money, providing a tremendous profit margin, while at the same time adding little to no direct value to the consumer.

Consumer Credit Insurance

A form of consumer protection insurance is provided for covering any outstanding credit or credit card purchases in instances when a borrower dies, becomes disabled, or changes employment. Although such insurance appears mutually beneficial, it may certainly be unnecessary, especially when one considers that a large part of it is already provided by either a life insurance or a disability insurance policy. The worst part is that it may have a very low rate of claim approvals or may have settlement amounts that do not come close to what is being paid. Fortunately, with expert help, you can refund add-on insurance that has been unknowingly purchased. This will allow borrowers to recover some costs and avoid unnecessary financial burdens.

Accident-Only Health Policies

Accident-only health insurance policies cover injuries resulting from accidents but exclude illnesses and chronic conditions. Even though they are considered inexpensive, additional coverage for people who already have medical insurance does not offer much financial protection. The medical bills arising from frequent illnesses or pre-existing medical conditions are also not covered by accident-only health insurance. Consumers are advised to analyze different insurance plans before purchasing accident-only insurance.

Identity Theft Protection Plans

Identity theft protection services guarantee that they monitor personal information and restore credit in the case of a breach. While this sounds like a decent premise, most plans repeat free or low-cost services like credit monitoring that many banks and credit bureaus provide. The restoration process can often be quite long and may not be covered by the plan. This may not be the most financially prudent endeavor because the costs accrued from high monthly fees are usually higher than preventive habits, which also consist of habits such as monitoring statements and securing personal data.

In conclusion, there’s a whole slew of junk insurance products that will drain the finances without providing significant coverage. What consumers should do is endeavor to make a critical judgment of their needs for additional coverage or duplicate coverage already in place. Being informed, studying the terms of policies closely, and being judicious about what’s important can help avoid spending on unnecessary products while protecting real financial security.