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Sep 30, 2005 -- What types of insurance do you REALLY need

There is a lot of confusion these days over what types of insurance you really need. There are only three. But first let’s discuss the kinds of insurance you don’t need. One kind of insurance you should never buy is credit life insurance, also known as “croak and choke.” Mortgage life insurance is the technical term. The salespeople pretend it’s a great idea, claiming that if you die your debts are paid off. But how important is it to pay off your debts when you’re gone? Basically, with this insurance, the bank gets paid off and gets your money instead of your heirs. In addition, the premiums are about 10 times as high as traditional types of life insurance. Mortgage life’s cousin is credit life insurance, and you are pushed to get this when you buy a car or other big purchase. These are sold as protection for you, but really they provide protection for the bank. So, it’s essentially like putting lipstick on a pig. Maybe it looks better, but it’s still a pig. Another popular item is the variable annuity. It’s almost never a good idea to buy one of these because there are monstrous commissions. What about cancer insurance? If you get cancer, you need health insurance and term life insurance, and that’s it. And, if you can’t work and need replacement of your income, you want disability insurance. Those are the only three you need. All the others you can chuck. What about your car? You don’t need rental insurance when renting a car, first of all. If you get in an accident, you’ll owe regardless of whether you have insurance. And usually your credit cards or auto insurance company has some type of temporary rental car coverage. PEC or “personal effects coverage,” which covers things stolen out of your rental car, is not necessary either.

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What others are saying

  • "If you get cancer..."
    If you get cancer, you need health insurance and term life insurance, and that’s it.

    What if this is your situation? You have 4 children, two of them are under the age of 15 and you are 59 years of age. You are diagnosed with a terminal form of cancer. You die at at 61 and your term life insurance expires at Age 60? Term insurance does not fit every situation because the owner gambles with many variables. Insurance companies love selling these policies because they actually pay a death benefit less than 5% of the time.
  • Re: Please get the facts "1st"
    Thanks Mr. "Anthony" B. Smith. You provided a good laugh for me this morning. I loved the "use" of quotes in your "argument". It really "helped" get your "point" across. I am sure your clients are in "good" hands.
  • Please get the facts "1st"
    Mr. Howard,

    I value your position as a consumer advocate, however your article, void of full detail cost me a client, and I'll explain why. 1st, your article doesn't give readers a full overview of "all" Mortgage Protection insurance policies. Traditional coverage did lend itself to what you're saying in the form of PMI. I work with carriers such as ING, Mutual of Omaha, Old Mutual & Shenadoah life that provide an "excellent" benefit to those choose a mortage product. 2nd, your article does not provide correct about why this type of plan works for many people, how much coverage may be obtained, and who the beneficiaries are. Further, the cost is "not" on average ten times more expensive, that honestly Sir is a gross misrepresentation of the facts. I would be honored to sit down with you and properly educate you in these areas. I am licensed here in NC and have worked in the insurance industry for six years.
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