Insurance Experts Explain: 7 Costly Insurance Features You Absolutely Don’t Need
Written by
J. Arky
Edited by
Jenna Klaverweiden
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Insurance is a necessary component of life. From health to home to auto and beyond, having insurance means that you are equipped with a backup plan in the event that the worst happens to you and your family. Comprehensive coverage, depending on the type and policy offered from company to company, usually covers all bases, though some insurers try to offer more.
“Some insurance policies can include costly features that may not provide significant value for the consumer,” said Todd Greenbaum, CEO of insurance technology company Input 1. “The goal is to find the right balance of coverage and cost without falling for unnecessary extras.”
GOBankingRates reached out to several insurance experts to get their take on costly insurance features you absolutely don’t need.
Lower Deductibles
“Some disreputable health insurance brokers may try to lure you into purchasing costly features or ‘bells and whistles’ that are not necessarily beneficial for your healthcare needs,” said Evan Tunis, president of Florida Healthcare Insurance.
These additional features may seem appealing at first, Tunis warned, but they could end up costing you more money in the long run without providing any significant benefits. One common tactic used by unscrupulous brokers that Tunis has seen is promoting plans with low deductibles.
“A low deductible means that you will have to pay less money out of pocket before your insurance coverage kicks in,” Tunis said. “However, these plans often come with significantly higher premiums, which can add up over time. It’s important to carefully consider your healthcare needs and budget before opting for a low deductible plan.”
Gap Insurance
According to Geico, “Gap insurance is an optional type of car insurance that covers the difference between what you owe on your car loan and the depreciated value of your vehicle if it’s totaled, providing financial protection for leased or financed vehicles.”
Geoff Cudd, founder of FindTheBestCarPrice.com, called gap insurance an “unnecessary add-on … if you’ve made a substantial down payment and owe less on your car than its market value.”
Cudd explained that it can be beneficial in some cases, but most likely, it won’t be. “While this can be useful for some, it often isn’t needed and can add up to $20 per month to your premium,” Cudd said. “Similarly, extended warranties are frequently pushed, costing hundreds of dollars annually, even though many modern vehicles come with robust factory warranties.”
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Roadside Assistance
Roadside assistance on auto policies is an additional $10-$30 each month for a service you can get for a one-time $50-$100 fee, in the experience of Vonda Copeland, owner of Copeland Insurance Agency. “I’ve seen clients pay $500/year for roadside services they never use. Avoid it and only pay if needed.”
Greenbaum agreed that roadside assistance can add $20-$30 per year and added that it “is often redundant if your car warranty or AAA membership already covers it.”
Accidental Death Benefit
Accidental death benefit (ADB) or accidental death and dismemberment (AD&D) riders are part of a life insurance policy, but you don’t need to bother with them, according to Randy VanderVaate, CEO and founder of Funeral Funds of America.
“The ADB rider provides an additional payout on top of the base death benefit if the insured dies as a result of an accident,” VanderVaate explained. “This means that if you have a policy worth $500,000 and an ADB rider worth another $500,000, your beneficiaries would receive $1,000,000 if your death is classified as accidental.
“The ADB rider only pays out if death is due to an accident,” VanderVaate said. “According to statistics, most deaths are caused by natural causes like illness, old age or other health-related issues, not accidents. This means the likelihood of this rider paying out is relatively low. Adding an ADB rider to your life insurance policy increases your premium. Given the low probability of an accidental death, this additional cost might not be a wise investment.”
Food Spoilage
If something about this stinks, it might not just be the odor coming from your refrigerator. This feature can be added on to home policies, yet its core is rotten and worth throwing out on sight.
“Food spoilage typically only covers up to $500 per year but adds $5-$10 to your monthly bill,” said Ryan McEachron, CEO of ISU Insurance Services ARMAC Agency. “And the odds of a total loss of your valuables in a covered event are miniscule.
“Stick to baseline coverage on homes and only add additional coverage if absolutely necessary,” McEachron said.
Extended Dwelling Coverage
Some insurance brokers and agents push clients to buy extended dwelling coverage, which increases your coverage limit beyond the estimated cost to rebuild your home. This can add several hundred dollars to your annual premium, but it’s often unnecessary if your policy already includes inflation protection.
“Compare quotes from different companies for the same coverage to find good value,” suggested John Crist, founder of Prestizia Insurance. “Review policy details and ask agents to explain parts you don’t fully understand. Make sure you’re not paying for ‘bells and whistles’ that provide little real value.”
Identity Theft Protection
These days, everyone is worried about their identity getting stolen, phones and smart devices getting hacked, and not being able to recover the pieces once they are in the hands of thieves. Insurance brokers might try to scare you into getting coverage for this kind of scenario, but it’s not worth it.
“Identity theft protection, costing $25-$50 annually, is often less comprehensive than standalone services,” Greenbaum said. “To avoid unnecessary charges, carefully review your policies and consult with a transparent broker.”
“The goal is comprehensive coverage at the best price, not the cheapest policy or the most features,” Crist explained. “Do your research, understand your needs and don’t be swayed by pressure sales tactics. With some informed shopping, you can get great coverage at a fair price.”
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