3 Types of Insurance Policies That You Don't Need

types of insurance you don't need
Some types of life insurance may be a better investment than others. Photo: Westend61/Getty Images

There are some types of insurance that everyone  should have. Car insurance, health insurance, and homeowner's insurance (if you own a home) are easily in the top three. Life insurance and long-term care insurance are also worth looking into.

These can help protect your health, life, and property; at the same time, they also provide financial reassurance for your loved ones. But there are some types of insurance that may be unnecessary. As you assess your needs, look into whether you really need these policies.

Key Takeaways

  • There are insurance policies that everyone should have. But there are others that most people are probably better off without.
  • Mortgage life insurance, travel and flight insurance, and cancer insurance are three types you likely don't need.
  • These policies aren't usually needed. That's because your existing insurance policies may already cover those situations.

Insurance Policies You Don't Need

While there are plenty of insurance policies that have their place in your life, there are just as many that you're probably better off without. They may sound appealing in theory. But in reality, you may be wasting money on them.

Here are three types of insurance you most likely don't need.

1. Mortgage Life Insurance

Mortgage life insurance is a policy that promises to pay your mortgage payment in the event you become disabled or die. This can sound attractive. But there are some snags associated with this type of coverage.

Mortgage life insurance is very narrow. It only covers your mortgage. If you pass away without a traditional life insurance policy in place, your loved ones will receive no other financial benefit.

Mortgage life insurance policies can be more expensive than regular life insurance. Also, the death benefit decreases over time. That's because these policies are designed to cover the outstanding amount owed on your mortgage. Assuming that you're paying your home loan down consistently, you're essentially paying potentially steep premiums for shrinking coverage.

Here's what it comes down to: Mortgage life insurance is very narrow in its coverage. Therefore, it's probably not the best use of insurance premiums. You're better off sticking with a good life insurance policy. You can always increase your life insurance coverage to offset your mortgage balance if that's something you're concerned about.


Be sure to compare your options for life insurance. Term life insurance, for instance, can offer lower premiums. But it only covers you for a set time period. Permanent life insurance covers you for a lifetime; the trade-off is higher premium costs.

2. Travel and Flight Insurance

Travel and flight insurance policies offer another type of coverage that may require you to pay a premium for insurance that could overlap with benefits you already have. Before you spend money on travel insurance, check your current health and life policies. Find out how accidents or injuries during travel or flights are covered. In the event of a catastrophe, your life insurance policy should cover you if you pass away while traveling. 

If you use a credit card to book tickets or travel arrangements, you'll also want to check with your credit card company You may have travel protections included with your account. Many credit card companies automatically provide benefits; these could include car rental insurance, lost baggage insurance, or travel accident insurance. They may be part of your cardmember agreement. The caveat is that you'll need to book those travel expenses using that card in order to get those benefits.

And what if you find that you still need some additional insurance to keep your mind at peace? You can always purchase a small travel policy to cover any gaps.


Credit card travel insurance may not cover you in every situation. For instance, your card might not reimburse you for travel expenses if your trip is cut short by certain types of natural disasters.

3. Cancer or Disease Insurance

Critical illness coverage like cancer insurance is becoming more popular as cancer rates and awareness rise. So, is it really a worthwhile investment? It's true that cancer treatment can come with some high medical bills. But you might want to hold off on taking out a cancer-specific insurance policy.

Here's why: In most cases, your primary health insurance policy covers medical expenses related to cancer treatment. If you're worried about expensive treatments leaving you with out-of-pocket costs once you reach the coverage limit, review your current policy. Find out how much the policy pays. 

One shocking reason cancer insurance policies can be a waste of money is that most cancer insurance doesn’t even cover skin cancer. And skin cancer is very common.

Not only that, but cancer insurance most often doesn’t cover outpatient expenses related to cancer treatment. There's always the possibility that you will not get cancer at all. In those scenarios, you have to question exactly what you're paying for with these types of policies.  

In some cases, your health insurance may not cover cancer-related expenses. Or, you may have a high likelihood of getting a specific type of cancer that could be covered by a cancer policy. But other than these situations, you may simply be wasting money on a cancer insurance policy.


And keep this in mind: In some cases, your primary medical policy might not cover you if you have supplemental coverage elsewhere for the same types of treatment. As with any type of insurance, be sure you understand it completely before buying.

If you have life insurance, it's worth checking to see whether it includes a rider that would allow you to tap into some of your death benefit during your lifetime to cover critical care. Some policies allow you to draw on death benefits to pay end-of-life expenses. But that does reduce the amount payable to your heirs once you pass away.

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