- Extended warranties
You’re sure to be offered an extended warranty whenever you buy an expensive new gadget or even a car. They are supposed to provide protection once the manufacturer’s guarantee ends. Extended warranties can be costly. Extended warranties can sometimes cost up to half the purchase price.
The other main problem is that some of the terms and conditions are so restrictive that the “guarantee” is basically useless. Some extended warranties on cars, for instance, tie you down to a specific repair shop or brand of oil. If you take your vehicle to another shop or use a different product, your warranty will be null.
- Lenders’ mortgage insurance
If you don’t have a big enough deposit when you take out a mortgage (at least 10%) you will be forced to take out lenders’ mortgage insurance (LMI). LMI is typically added to the loan at 2.1% for those who have less than 5 percent deposit on a loan of $300,000.00.
LMI means you’ll end up paying around $12,000 more interest and a loan amount totalling $306,000. It’s unavoidable if you want a home loan with a small deposit but the other thing you need to remember is that it doesn’t offer you any protection if things go wrong.
It is insurance for the lender. If you default, it’s the lender who gets to make a claim on the LMI and sell your home. Wow!
- Funeral insurance
It sounds cheap on the TV ads but when you add up what you’ll pay per year over your life expectancy you will have paid enough to cover the cost of a very expensive funeral! Yes, you want to ensure your family doesn’t have to worry about financial matters when it is grieving your passing but funeral insurers are inclined to grossly over-inflate funeral costs. You might save money for funeral costs in a high interest account and give your great-grandchildren and great-grandchildren a break on the interests.
- Mobile phone insurance
The proliferation of smart phones, and all the applications that they offer, has made them a target for thieves. If your phone is high-tech, you should consider insurance. It is possible to save on your phone insurance premium.
Phone policies cover theft, damage, and function failure. Unauthorized users are also covered by the best policies, which can be worth thousands of dollars in the event that there is theft, loss, damage, or other losses.
A year’s iPhone insurance goes for around $150 for between $500 and $5,000 in cover, depending on your circumstances and the phone model.
Although insurance is an option for telco customers at the time they purchase their phones, it can be difficult to buy insurance after your phone’s first month. RAC Insurance offers iPhone coverage starting at $27 per annum
- Accidental death or total or permanent disability
Although accidental death coverage is sometimes confused with term life insurance it is actually much less. Accidental death coverage will not cover you if your loved one is killed in an accident. If you suffer a stroke, heart attack or other natural causes of death, your policy will not cover you. Although these policies aren’t expensive, you get what you pay.
Total and permanent disability are also available. These policies can only be purchased by those who are permanently disabled and are unable to work again. These policies are not to be confused by income protection insurance, which pays a portion of your income in the event of an injury or illness within a reasonable range.
- Pet insurance
It is not uncommon for vet bills to add up. Fixing a dog’s broken leg can cost between $800 and $1,500. The annual premiums for cats and dogs range from $100 up to $600. This will cover you for up to $15,000 of insurance. It can be difficult to get insurance for pets that are older or have ongoing medical conditions. Certain policies require pets to be vaccinated. If your pet is in good health and doesn’t stray from home you may be better off putting a little extra into a savings account where you’ll earn interest and can use the funds for other reasons if you don’t need to pay the vet.