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# Pass on these Insurance Offerings

The creativity of the insurance industry over the last few decades has proven to be absolutely astounding in its ability to separate the buying public from their money. Although insurance is a vital part of the financial portfolio of most prudent people, all insurance products are not useful. One way to decide whether or not you need a new insurance product is to stay focused on what the core purpose of insurance is: to restore the insured (or the insured's beneficiaries) to their original financial position, not to provide an opportunity for making a large profit. You might also consider whether or not the insurance coverage is so narrow (for example, flight insurance) that the money spent protecting yourself against such an unlikely event isn't worth the benefits your survivors would receive. Some of the offerings that are widely suggested by consumer organizations and financial planners to be quite unnecessary and are listed below:

- Children's life insurance policies. When a baby arrives, insurance agents trying to sell life insurance for the offspring typically bombard new parents. The sales pitch usually touts the huge advantages of the policy because it can provide a college fund through an increase in cash value. But there are far better investments that can be used to supply a college fund than this. Again, the purpose of insurance is to restore the family to its original financial position -- in this case by protecting against the loss of a family member's income. Unless you're the parents of a child star, this policy really isn't necessary.
- Credit life insurance. This offer, typically made to new customers of credit card companies, finance companies, and car dealerships, offers to make your monthly account payments for you should you become disabled or unemployed (it will also pay your account fully if you die). There are, however, a few catches. First, the premiums are usually quite expensive for the dollar-amount of coverage provided. Next is the fact that -- and this is only stated in the fine print, which you should always read -- the insurer will only pay the monthly minimum toward your balance, and often for not more than a year. Meanwhile, interest continues to compound and the balance grows. Rather than buying this type of policy, it would be wiser to deposit more funds into your emergency savings coffers.
- Mortgage protection insurance. Similar to credit life (but in no way to be confused with PMI or MIP), the insurer promises to make your mortgage payments for six- to twelve months in the event of disability or unemployment. And like credit life, the same drawbacks exist. The length of time that payments are made is limited and the policy is outrageously expensive, up to four percent of your annual mortgage amount.
- Dread-disease insurance. With this insurance, coverage is provided if you should contract a particular catastrophic disease, such as cancer. However, the payouts on these policies are typically just 50 cents or less on each premium dollar spent. You'd be much better off investing in a policy that covers all diseases.
- Flight insurance. Flatly stated, the cost is high when you consider that statistics show you're many times more likely to be killed in a car accident than a plane crash. Not exactly a high note to end on, but you get the picture. Your money's more wisely spent elsewhere.

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