We buy insurance to protect ourselves from liabilities or loss that would be far too expensive to cover on our own. But some policies really don’t offer protection and only add frustration. Which policies are worth paying a premium for?
Critical-illness insurance: Most of these policies pay out a lump sum and may also offer a monthly payment for policyholders who are diagnosed with a critical illness.
The illness must be on the insurance company’s list of acceptable illnesses. There may be a requirement for the policyholder to survive a minimum number of days from diagnosis. Some policies may not cover outpatient treatments and illnesses that arise from the disease. The insurer may also have specific rules to determine whether a diagnosis is valid. Having a solid medical-insurance policy may be a better place to put your dollars.
Long-term-care insurance: This insurance is designed to help cover the costs if you eventually need long-term care. For folks with an average income or savings, it may make sense. For those with a lot of money or no money, it probably doesn’t. Low-income retirees likely can get Medicaid, which will at least pay the bills. Higher income retirees should try to save enough money in case they do need long-term care. Some policies may offer good coverage but it is expensive.
Disability insurance: These policies can be costly and the coverage can vary. Most require a waiting period of a certain number of days you have to be disabled before you can receive your benefits. Still, about one-third of workers end up on the disabled list, out of work for three or more months, at some point in their careers, so it could be a good idea to find out what coverage you might — or might not — have at work. And these policies can be useful for self-employed people, but read the fine print to understand your coverage. Clarify the insurers’ definition of disability.
Life insurance: This insurance policy is a must for parents. There are several types of policies and you should meet with a licensed agent to make sure you get the policy that will best meet your needs and the needs of your family.
Earthquake and flood insurance: If you live in an area that is subject to these disasters you should try to take advantage of these policies. Your home is your largest asset. Earthquakes are not covered under standard homeowners or business-insurance policies. That said,earthquake insurance is costly. Flood insurance is provided through insurance companies that participate in the National Flood Insurance Program. Source: Marketwatch