The Insurance You Don't Need

Long-Term Care

some policies just soak you

Luicy Vigrass

This insurance protects you and your kids from skyrocketing elder-care costs in case you wind up needing care at home or in a nursing home in your golden years. It's a great policy to have -- just not if you're under 40. "As long as you buy by age 50, the premiums should stay between $400 and $1,000 per year," says Marilee Driscoll, a columnist at ltcmonth.com.

Life Insurance for Kids

The purpose of a life policy is simple: to support the people who rely on your income or caregiving in case you die prematurely. So why do insurance companies keep sending you ads offering cheap life coverage for your baby? Throw these come-ons out with the other junk mail, and use the money to firm up your family finances instead. "Saving for college and for your retirement is the best move you can make for your kids," says Chatzky.

Extended Warranties

When you buy almost any appliance, you're likely to get a hard sell on a service contract that covers the cost of repairs. That's because these contracts are a huge moneymaker (for the seller), not a worthwhile investment (for you). These policies can cost as much as one-third of your purchase price, and they often do little more than duplicate the warranty you already have. Many also don't cover the specific parts that are most likely to break. Plus, a number of high-end credit cards (such as gold and platinum) automatically double the manufacturer's warranty when you use them for the purchase.

There are exceptions: For big-ticket consumer electronics that are heavily used and most likely to need repairing within three years (such as laptops, PCs, and refrigerators), extended coverage probably makes sense. Shop around for the best deal (they vary widely in length and terms), and, as a rule of thumb, never pay more than 20 percent of the purchase price of the product for an extended warranty.

Rental-Car Insurance

Check with your auto policy and credit-card company before your next trip. You may find one (or both) already provides all the personal-liability and collision-damage coverage you need. If so, you may be able to decline the extra $15 to $30 a day rental companies are dying to charge you.

Still, you'd better read the fine print of the contract first. Some major rental-car companies (including Thrifty and Dollar) recently started tacking on charges for renters who get into an accident to cover the car's diminished value and loss of use. Your automobile insurance or credit-card company may not pay for these fees, which could leave you stuck paying a portion of the bill. So you'll have to decide whether it's worth the calculated risk.

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