In general, buying insurance is a good idea. Car, health, and life insurance are necessary. Other types of insurances are often unnecessary and a waste of money. The cost of these policies outweighs any possible benefits. Insurance brokers use emotional rather than financial arguments to sell them to unsuspecting customer. Here are three examples of insurance that you should not buy:
1. Child life insurance: Life insurance exists to replace a person's income when they die. It protects dependents from financial difficulties once they can no longer rely on the breadwinner's salary. Parents often buy life insurance for themselves, naming spouses and children as the beneficiaries. Children have no income and, therefore, do not need life insurance policies. Buying child life insurances doesn't protect the child in any way. Nor is it a good financial investment.
2. Credit insurance: When you take out a new credit card or a loan, the lender will try to sell you credit insurance. The idea is that if something happens to you, the insurance company will pay off your debt. There are different types of policies insuring you for anything ranging from illness and unemployment to death. For the vast majority of borrowers, it's a waste of money. There are other types of insurance, like term life or disability insurance, that will insure you against the same thing for less.
3. Airline failure insurance: Statistically, the chances of the airline going bust before you fly are minuscule. Even if it does, you can still get your money back if you've paid for the flight with your credit card. There's absolutely no reason to buy this type of insurance.