Comprehensive and collision coverage for old cars
Of course, you want to keep your car insured (it’s the law in most states), but beyond the minimum requirements, there’s often no need to get comprehensive and collision coverage for a car with a very low Kelley Blue Book value, says Joel Ohman, a certified financial planner and the founder of carinsurancecomparison.com. Collision covers the cost of replacement and repairs after a typical car accident, while comprehensive takes care of events like fire, theft, vandalism, and falling objects. The latter coverage is often required by lenders, but once the car is paid off and the car’s value has dropped, many people forget to stop paying for it, Ohman says. A good rule, he adds, is that if collision and comprehensive coverage cost more than 10 percent of the car’s value, turn down both types of coverage. Don’t miss these other 7 ways you’re wasting money on your car.
If you already have car insurance, don’t buy it at the car-rental counter, says CPA Steve Elliott. Your existing policy should cover you if something goes awry. There are times when car-rental insurance may make sense, however. Ray Martin of CBS MoneyWatch points out that while your existing car insurance or credit cards may already cover a rental car, it’s a good idea to opt for the insurance if you’re driving outside the country or have high deductibles for personal effects stolen from the rental car. Also, avoid renting one of these 10 car models most likely to get stolen.
Mortgage life insurance
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Mortgage life insurance is basically life insurance meant to pay off a home in the event of a tragedy. However, mortgage life is typically 200 to 300 percent more expensive than term life insurance. If you had a $100,000 mortgage, for example, you would spend two to three times more on mortgage life insurance for that amount than you would if you bought a term life policy for $100,000 in coverage for 30 years. And with mortgage life insurance, the money typically goes directly to a mortgage lender, not to your family. It may make sense, however, for people who have a medical history that makes term life insurance prohibitively expensive. Find out how to know if pet insurance is worth it, too.