A. There are two principles you can use when it comes to purchase an insurance product:
- Catastrophic loss
- Comprehensive coverage
If an insurance product meets the above two principles, it's worth buying, for example, Term life insurance, disability insurance, etc.
You can skip the following niche insurance products:
- Credit life and disability insurance: when you get a card loan or maintain a credit card balance, you may get a pitch for insurance that pays off your loan if you die or disabled. However, this doesn't meet the catastrophic loss principle. Your life insurance and disability insurance should have enough coverage for such loans.
- Mortgage life insurance: this is similar to credit life and disability insurance, while the balance maybe higher in this case, it doesn't pass the comprehensive coverage principle, because it only covers mortgage, doesn't give your loved ones comprehensive coverage.
- Wedding insurance: it pays for nonrefundable deposits if the wedding is cancelled because of a natural disaster, death, illness, etc. This insurance doesn't pass our catastrophic loss principle, plus you need to read the fine print, and pay special attention to the policy's definitions of "act of God" and "natural disasters".
- Dental insurance: such insurance usually has a high premium but a not high coverage limit (e.g. coverage cap at $2,000 per year). If you know your family will use dental services a lot in a year, it's worthwhile to buy it, otherwise, you are better off to pay cash as you go.