7 Types of Retirement Insurance You Don’t Need

Posted by Melissa Rubin in Retirement Insurance.

7 Types of Retirement Insurance You Don’t Need

Retirement insurance safeguards you against catastrophic loss, but it can be expensive – and in some cases downright worthless. There’s no need to spend your retirement income on premiums when you could be putting that into your retirement savings. If you’re already covered by good homeowner’s, automobile, health, disability and life insurance policies, you can do without the following coverages.

  • Mortgage life insurance.This policy is designed to pay off your mortgage if you die. The downside is that it’s as much as five times more expensive than comparable term life insurance. Your current life insurance death benefit can also serve the same purpose.
  • Credit card loss protection. Federal law limits your loss to $50 per card without any type of personal protection policy, so there’s no need to spend that $7 to $15 a month. Instead, secure your credit-card numbers and report any lost or stolen cards immediately.
  • Car rental insurance. Check with your agent to see if your automobile policy covers any damages or injuries when you drive a rental car. Some credit card companies offer the same type of protection. This can save you $8 to $11 a day.

  • Flight insurance. This is also known as Accidental Death and Dismemberment (AD&D) insurance. It provides coverage while you are flying on a commercial airline. Your life insurance and health insurance should protect you if you were to die or become injured in a plane crash.
  • Cancer insurance. These high-cost plans – annual premiums range from $200 to $3,000 – pay for cancer expenses. Pass on this since your existing health insurance should already include cancer care.If you have Medicare and want more insurance, a comprehensive Medicare supplement policy is what you need.

  • Involuntary unemployment insurance. This policy makes minimum payments on your credit card or car loan for six to 12 months if you lose your job. At a cost of 70 cents per $100 of your credit card balance, you’d be better off using that money to help fund three to six months of emergency savings.

  • Identity-theft insurance. This reimburses crime victims for the cost of restoring their identity and repairing their credit reports. However, policies can cost $180 a year for up to $25,000 in coverage. A better option: Save your money and keep a close eye on your credit reports.

A life insurance policy, on the other hand, is one of the most valuable ways you can safeguard your retirement savings and invest in your financial future. If you don’t already have a life insurance policy, here are four key reasons to consider one:

  1. Income replacement - Proceeds from a life insurance policy can provide for your loved ones when you’re gone.
  2. Pay off debts - Life insurance death benefits can pay for burial costs, probate costs, credit card debts and medical expenses not covered by health insurance. It can also be used to pay off the mortgage, supplement retirement savings and help pay college tuition.
  3. Estate planning – The proceeds of a life insurance policy can pay estate taxes so that your heirs will not have to liquidate other assets.
  4. Charitable contributions – Designate some of the proceeds from your life insurance policy to go to a favorite charity.

Making sure you spend your money wisely for insurance protection can help you make the most of your retirement budget for years to come.