Mighty Bargain Hunter is hosting the Carnival of Personal finance this week. He dubs its “Cyber Monday Edition”. Check it out.

There are a lot of different types of insurance out there which people just don’t need. There’s such a thing as cancer insurance even though health insurance should already cover that. Now of days there’s even terrorism insurance and pet insurance. Nobody really needs these things, they’re just gimmick products. Of course we need good health insurance, life insurance, automobile insurance, and home insurance, but there’s a lot of bad insurance products out there that practically no one needs. What about identity theft insurance? Is this something worth while, or is it just another gimmick insurance plan?

In most cases, identity theft insurance isn’t worth it. Basically they pay you money in the event that your identity theft is stolen. It might be a big mess that you have to clean up which will take some time, but you haven’t received any real financial loss because of it, so why would you insure for that? These plans really don’t do anything to clear up the fact that you have had your identity stolen, they just give you money. They don’t solve the problem.

One company has taken a new approach to identity theft insurance which is much more helpful to preventing identity theft and taking care of the situation in the unfortunate event that your identity is stolen. Zander Insurance, a frequent advertiser on the Dave Ramsey Show, has come up with a new identity theft protection program, called their “Identity Safegaurds” program which might be a good solution for people worried about having their identity stolen, and really, we all should be worrying about it because it’s happening so often and the instances of theft are growing rapidly.

The plan itself offers a number of different services that makes your identity more secure so it’s less likely to be stolen. They’ll ask you a series of questions about your lifestyle and give you some suggestions as to how you can minimize the possibility of having your identity stolen. They’ll also alert you about new scams, frauds and security breaches to you know what’s out there. They’ll send you reminders once every 4 months to check one of your three credit reports, to make sure that there’s no suspicious activity on them.

In addition to the prevention services, they do a great job on cleaning up the mess if your identity is stolen. They will assign you a personal recovery representative which is essentially a case worker for you. They’ll put fraud victim alerts on your credit bureaus, notify creditors, financial institutions, and law enforcement agencies. They’ll work with you to take care of any legal issues and make sure your identity theft mess has been cleaned up.

In the event that you have to miss work or have to pay anything to clean up after your identity theft has been stolen, such as legal fees, court costs, credit reports, all the way up to $20,000 per individual, and there’s no deductible to speak of.

Overall this product is very solid. If you’re going to get identity theft insurance, Zander insurance is definitely the place to go for it. It actually takes care of the problem rather than just writing you a check and making you clean up the mess.

If you have a family, or someone else that depends on your income to live, life insurance is an absolute must. Too many families without life insurance lose one of the parents, and then the other parent has to work full-time and barely scrape by, it’s almost a financial death sentence. Even if you’re a stay-at-home mom, you need good quality life insurance, because if you’re not around to take care of the kids, there’s going to be added cost of daycare and much more. If you have a family, you absolutely need life insurance. Here’s some advice to help you find good quality life insurance?

How Much Life Insurance Do I Need?

You’ll want about eight to ten times your annual income in life insurance. The reason for this is that the goal of life insurance is to replace your income. If your spouse put ten times your income into a quality mutual fund that earns 10% each year, the investment are now making as much as you do when you’re working, and have a lot of money left over once the kids are on their own and no longer need your support.

What Type of Life Insurance Should I get?

Always get term life insurance. With term insurance, you’re paying for the cost of the insurance, nothing more, nothing less, and that’s all you need. whole life insurance products include a savings program within the life insurance, but when you die, the amount of cash value you have in your policy disappears, and your family is only paid the face value of the policy. In addition, you’re not getting a very good interest rate on the money that’s in your cash value insurance, and you’re paying a lot higher fees than if you had just gone out in term insurance.

If you took the difference between the term insurance and the whole-life insurance, and put that money into a solid mutual fund, you would make the amount of money in your cash value several times over. And if the unfortunate were to happen and you were to die, your family actually gets to keep the money in the investment, rather than having the cash value of a whole-life policy disappear.

How Can I Shop for Life Insurance?

You can either look online, or visit an independent insurance agent. Usually going to an independent insurance agent is the best way to go, because they can compare a lot more insurance companies than you can and often get you a better deal. If a better deal happens to come up on life insurance, they’ll let you know.

If you don’t want to go out and visit an independent insurance agent, you can comparison shop online by visiting places such as IntelliQuote and SelectQuote. You just have to fill out a few simple forms and the websites will automatically find you the best deal on term life insurance.

When Can I Get Rid of My Life Insurance Policy?

You won’t need life insurance forever. If you happen to get divorced or be in a situation where no one else is dependent upon your income to live, you no longer need life insurance. You only need life insurance when someone depends on your income to pay for their basic expenses. If you were a single parent that now has two adult kids, you probably don’t need life insurance.

You also don’t need life insurance if you have a lot of money in your investments and would be able to live easily if one of the spouses weren’t around any more. You would essentially be self-insured, and not need a sudden wind-fall of money if the father or mother in the family were to pass away.

Who Doesn’t Need Life Insurance?

If you’re a single individual and no one is dependent upon your income, you don’t need life insurance. If you die, your estate will pay for any debts you have, and then you’ll get buried. That’s all there is to it, you don’t need to worry about leaving your relatives a huge sum of money if you were to die, there’s just no reason to do it.

You should also not get any life insurance on your kids. Gerber frequently promotes their cash-value insurance for children on television, and you should never buy these products. Children don’t need any life insurance, because they do not create any income for the family.

One reason consumers fail to save money on their auto insurance is because they fail to review their policy every year. Only a very small percentage of consumers actually take the time and reap the benefits of this annual review. Look over your policy first to make sure it is still accurate and make sure you have the right coverage you need on all of your vehicles. If you have paid off a car loan, have a new driver, changed your mileage to work, or other changes have taken place in the last year, discuss this with your agent. You may be able to adjust your policy and get big savings in return.

After reviewing your policy, take some time to shop around for a better deal. If you find a better price, make sure you look at other factors including the new company’s ability to provide discounts and the services and coverage your require. Take into consideration that by switching insurance company, you may lose out on customer loyalty discounts and other special offers reserved for long term customers.

Make sure the terms of your policy are still financial acceptable. If you are making more money a year later, you may want to consider increasing your deductible and paying smaller premiums. Just make sure you will have enough cash to put out in the event you need to file a claim and have your vehicle repaired.

If you make a move to a new company, stick with a company who has a good reputation and not just the company with the lowest quote. In the event you ever need to file a claim, you want to be sure your insurance company has your back.  While you may never need to file a claim, those who do will soon learn how important it is to be able to rely on the company’s assistance. Because there are so many new companies springing up online offering what seems like great rates, it is always worth it to do a little homework and make sure the company is legit and that they are licensed to provide insurance in your state.

Last but no least, make sure if you are changing insurance companies that your coverage does not lapse. Ensure with the new company that your new policy will begin as soon as your current policy expires, usually at midnight on the expiration date. If you switch to a new company in the middle of a policy term, be sure to cancel your old policy in writing and follow up with the company to see if you qualify for a refund of the unused portion of your paid premium.

Do you know what Payment Protection Insurance (PPI) is?  Most often, it’s an insurance program sold with a mortgage that is meant to cover your payments in the event you fall ill or are unable to work.  It’s considered a voluntary debt cancelation program, however, some loan providers make it a requirement for borrowers to purchase PPI coverage in order to get approved for their loans.

The amount of money a person would pay for their PPI coverage is based on the amount of the loan; and is often just added into the monthly payment.  There are other forms of payment protection insurance which are meant to cover bills other than mortgages, including credit cards and car payments, if you cannot work.

Payment Protection Insurance sounds great in theory- but a study by Citizens Advice (a national charity organization) shows that 85% of people who tried to put in claims under their PPI coverage were unsuccessful.

PPI policies that are sold by several well-known mainstream lenders exclude coverage for several of the more common problems which may keep people from working, things like mental issues or bad backs.  There are even PPI policies with age limits; and that exclude people who are self-employed.

When people have been able to successfully make a claim under their PPI insurance, the amount of money that was paid out does not usually keep the individuals free from debt- particularly for credit card PPI coverage.  In many cases, payment protection insurance only pays over a period of a year- but does so with minimum monthly payments so, for example, a borrower who is able to claim payments from their PPI policy on a $1,000 credit card account would see their entire debt reduced by about $12 over the course of the year!

Citizens Advice Chief Executive David Harker said, in an article for CitizensAdvice.org.uk:

“Payment protection insurance is sold to borrowers with the promise of peace of mind and reassurance that credit repayments will be covered if they fall on hard times.  People are lulled into a false sense of security, only to find that far from providing protection against an unexpected drop in income, PPI often just adds to their debt problems.

“At best the excessive cost for minimal benefits makes it bad value for many people; at worst mis-selling means the most vulnerable people are parted from large amounts of money under false pretences and left even more exposed to debt.  This is particularly worrying at a time when personal debt levels are escalating.

“These problems are not new – we first reported on them ten years ago.  It is a scandal that in this time so little has been done to remedy them. Selling PPI is big business, and this insurance does not come cheap, so it is high time the industry developed good minimum standards of cover.  We badly need an official investigation of how this market is operating, leading to effective regulation that ensures a fair deal for all consumers, and which also protects the most vulnerable.”

Turns out that many lenders are offering the Payment Protection Insurance coverage to people who simply wouldn’t qualify if they attempted to put in a claim.  Before you agree to purchase PPI policies, be sure you qualify for submitting claims, and that the policy will cover the entire debt (rather than make minimum monthly payments for a specified period of time).

Home owner’s insurance premiums are costly, but there are a number of ways you can reduce the amount you pay to cover your home against the unthinkable. Here are 7 ways to reduce your home insurance premium:

1. Install an alarm system. Most insurance companies will provide you with a discount if you have an alarm system installed in your home. Discounts range between 5% and 30%.

2. Combine all of your insurance policies. Look for an insurance company that offers multiple lines of insurance policies and then insure everything with one provider. For example, your home owner’s insurance, automobile insurance, and life insurance can all be with the same company which will likely result in a “multiple line discount”, typically 10% off your total insurance premium. Look for a mortgage list brokers which can help you get a list of providers in your area, specifically ask for their direct mail mailing lists which will contain all of the latests ads and offers.

3. Disaster Protection and upgrades. In areas that are prone to natural disasters (earthquakes, hurricanes, etc) you can often install features like reinforced roofing or storm gutters and gain a discount. Sometimes upgrading your heating and electrical systems will give you an insurance premium discount as well, so check with your company to find out if any of these home upgrades will result in a discount.

4. Stop smoking. Not only is smoking bad for your health, but it’s one of the leading causes of home fires. Smokers pay less for home owners insurance than non-smokers. Quit smoking and call the insurance company to update the record for a lower insurance premium.

5. Raise the deductible. Just like automobile insurance, homeowner’s insurance premiums have deductibles. This is the amount of money you pay if you submit a claim; the insurance company pays for damages above and beyond the deductible amount. If you can afford to raise your deductible from $500 to $1000, for example, you can experience savings of around 25%.

6. Raise your credit score. It seems more companies are relying on a credit score to determine how much people should pay for certain policies- and home insurance often relies on your credit score as a determining factor in how much you’ll pay for home owner’s insurance. Agree with it or not, the best thing you can do is raise your credit score.

7. Forget about the land. Most disasters will cause damage to your home, and very little to the land. Decide to cover your home only and you’ll save considerably on your home insurance premiums. Many marketers that collect new homeowner lists will specifically market home-only insurance. If your land is in a hot area, you don’t need to insure it.

Companies sell insurance to help the average consumer relieve some of the fear of the unknown.  We don’t know what’s going to happen to us in the future, and that fear of the unknown is often what drives us to purchase insurance.  While there are many good reasons to buy insurance (for your car, for your life, for your health…) there are also many insurance policies you can, and should, live without.

• Private Mortgage Insurance (PMI):  PMI isn’t for you – it’s used to protect the lender against loss and is a policy required to “high risk” mortgage borrowers.  There are no benefits to you as the borrower of this insurance policy.  To avoid paying PMI,  you need a downpayment on your home of 20% or more.  A smaller downpayment puts you in the “high risk” pool of borrowers.  Alternatively, you can put down 10% of the purchase price and take out two home loans, one for 80% of the sale price of the property and one for 10% (with the loan for 10% being the other 10% that makes up your 20% downpayment!) just make sure that interest rates work out in your favor – if you are only approved for high interest rates it’s possible the PMI rate is actually lower than having two loans.
• Rental Car Insurance as Part of Your Regular Car Insurance Policy: There are a number of automobile insurance policies that allow you to add rental car insurance.  You amortize the price over your lifetime (or as long as you have that particular policy anyway), so it doesn’t seem like costly coverage but how often do you really rent a car?  Do you have a credit card that includes rental car insurance coverage if you pay for the rental on the card?  Chances are, you’re just wasting money paying for rental car insurance as part of your every day car insurance policy.
• Flight Insurance: Do you purchase flight insurance whenever you board an airplane?  Sure, your family will get $100,000 or whatever the amount your policy covers in the event the plane comes down and you don’t survive – but if you have a life insurance policy, chances are you’re covered already against a catastrophe like a plane crash.  Check into your life insurance policy to see whether or not purchasing flight insurance is necessary.
• Flood Insurance: There are only a few areas of the country that actually are at risk for flood damage.  If you’re not located next to a large source of water – chances are you’re not going to be flooded!  If your neighbors have never had flood damage – you probably won’t be the first house on the street to be flooded!  Instead of paying a monthly or annual flood premium, put that money into a savings account – you can pull it out in the very off-chance you experience a freak of nature event that floods your house.
• Unemployment Insurance: These policies are designed to help you pay the minimum payments on all of your bills if you become unemployed through no choice of your own.  While it sounds good at first glance, paying the minimums on credit cards doesn’t stop interest and finance charges from accruing so the money sent to these accounts will basically be wasted.  Instead of paying for an unemployment insurance policy, you’d probably be better off establishing an emergeny fund to help you cover your living expenses for several months should you lose your job.
• Credit Card Insurance: Yet another way the credit card companies make money from cardholders, credit card insurance plans are supposed to cover your minimum payments for qualified claims.  One of the problems is the type of qualified claims are very minimal – meaning most of the reasons you could be unable to make your payments won’t qualify for the insurance coverage.  Also, if you are self employed, you can never put in a credit card insurance claim – a small piece of information they often fail to mention when signing you up.

Before signing on the dotted line and handing over money every month for insurance premiums, find out exactly what they cover (and what they don’t cover).  You may already have coverage under larger insurance policies that protect you for many of the instances discussed here.