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One situation where an umbrella policy might be a good idea is if you have a renters insurance policy but want to increase your coverage from whats available on your existing account. Before considering it however you should find out if it’s cheaper to just increase the premiums on your existing insurance and increase the cap as a result.
Whole Life Insurance
Whole life insurance is more of a permanent type of insurance. The aim of life insurance is to provide for your family when they suffer a financial loss upon your death. It’s basically what term insurance does best. Whole life does it too, but quite horribly, and its generally a terrible investment.
Whole life insurance is partly an investment where they claim that you get cash value over the years. While that is true, most of what you get gets eaten away by costs and fees since the cost of whole and variable life insurance is expensive. Insurance wise, whole life premiums costs ten times as much as similar term life insurance policies, so it’s a pretty expensive policy to get. In short, you might get less coverage in a whole life insurance policy than you would a term life policy, even if you pay more on whole life.
Accidental Death
The financial cost of death, regardless of cause, is the same. From a financial standpoint, means of death is unimportant, and this can be covered by low-cost term life insurance. It is unnecessary to buy additional policies such as accidental death or mortgage life insurance policies.
Extended Warranties
You ever wonder why sales people push you to buy extended warranties on your mattresses or electronics? It’s because they are incredibly profitable for the retailer. Most warranty policies defects and bad workmanship but do not cover the most likely cause of damage to the product – accidental damage such as dropping a phone, knocking over a TV or setting fire to something. So if you’re worried about your kid throwing something at your expensive TV you are better off buying a tempered glass protective screen than investing in an extended warranty. If you are talking about an item that is known to get damaged, despite careful use, then maybe the extended warranty would benefit you. Bottom line, do your research on the product before buying an extended warranty.
Disclaimer: Our service is not intended to be, nor should it be construed as financial advice. We help our readers make informed decisions via impartial information and guides. Where appropriate, we may introduce partner companies who can provide services relating to financial products.