17 Insurance Policies That Are a Complete Waste of Money—But Almost Everyone Buys

Millions of people still buy certain insurance plans, thinking they’re playing it safe—but many of these policies are more of a money drain than a real safety net. While insurance can help cover surprise costs and protect you from debt during emergencies, not every plan is worth the price. Some, like pet insurance or other optional add-ons, often cost more than the benefits they provide. In some cases, the extra coverage can even hurt your budget.

This article breaks down 17 insurance plans that may sound helpful but often end up being a waste of money—so you can avoid overspending on coverage that doesn’t truly help you.

1. Credit Life Insurance (or Dealership Gap Insurance)

Credit life insurance, often called dealership gap insurance, is an optional add-on to loans like car financing or mortgages. It covers the remaining loan balance if you die or become disabled. While it sounds helpful, this insurance usually benefits the lender, not your family. It simply pays off your loan and doesn’t offer financial help to your loved ones.

Premiums can be high—especially if bought through a dealership—and some lenders might try to slip it into your agreement, which is illegal. A better alternative is a regular life insurance policy with added value. That way, your family gets direct support and more flexibility instead of just clearing your debt. Always read loan terms carefully and consider who really benefits.

2. Rental Car Insurance

When renting a car, you might be offered extra insurance by the rental company. But this is often not needed. Many credit cards already include rental car coverage, such as a collision damage waiver, if you use the card to pay and decline the rental company’s insurance. Your own auto insurance policy may also extend to rental cars, especially within the U.S. and Canada.

However, coverage might not apply to international rentals or high-end vehicles. It’s smart to check your credit card’s terms and your car insurance policy before you travel. Knowing what’s already covered can help you skip unnecessary fees and save money when renting a car.

3. Extended Warranty Coverage

When buying something expensive, like a new electronic device, you might be offered an extended warranty. It may sound like a good deal, but it’s often not needed. Most products already come with a manufacturer’s warranty that covers problems during the early months. If something is wrong, it usually shows up soon after purchase anyway. Stores often push extended warranties to make extra money, but these plans add to your total cost.

Instead, check if your credit card offers purchase protection—it may already cover repairs or replacements. In many cases, between the standard warranty and credit card benefits, you’re already covered. So think twice before spending extra on an extended warranty you probably won’t need.

4. Flight Insurance

Flight insurance is often offered during checkout when booking a flight, but it’s usually not worth the extra cost. Airlines use tactics like showing how many others bought it to make you think it’s necessary. In reality, if your flight is canceled or delayed, the airline must refund you or provide another flight. If there’s an accident, airlines are already responsible for compensating injured passengers or their families.

Flight insurance doesn’t add much value—it just raises your total price. A better choice is to use a travel rewards credit card. These cards often include travel protections, plus perks like free checked bags or upgrades. Skip the flight insurance and let your credit card benefits do the work.

5. Travel Insurance (Based on Coverage Rules)

Travel insurance can be helpful, but it’s important to understand the details before buying a policy. While it may cover things like lost bags, injuries, or health issues, many policies come with fine print that limits what’s actually covered. For example, some won’t cover pre-existing medical conditions or risky activities like adventure sports.

You should also be aware of the claims process—it can be slow and might require you to pay out of pocket first, then wait for reimbursement. Check coverage limits too, so you know how much will actually be paid for medical care, trip cancellations, or other problems. Read the terms closely and ask questions so you know what you’re really getting before spending the money.

6. Whole Life Insurance

Whole life insurance covers you for your entire life, as long as you keep up with the monthly payments. It guarantees a payout to your beneficiaries when you die, unlike term life insurance, which only covers a set period. Many people see whole life insurance as a way to protect their family and leave behind money. It can also be used as part of estate planning.

However, whole life insurance costs much more than term life. For many, it makes more sense to buy cheaper term coverage and invest the savings in other ways—like retirement accounts or other assets. These can grow over time and leave more money behind. Before choosing whole life insurance, it’s smart to think about your long-term goals and compare all your options.

7. Any Type of Life Insurance After You Hit Retirement

Life insurance is mainly meant to cover lost income or large debts. But if you’re retired, debt-free, and have saved well, buying a new life insurance policy may not be worth it. You’ve likely built up enough savings and assets to leave behind for your loved ones without needing extra coverage. While a new policy could add to your estate, it usually doesn’t benefit you or your spouse and can come with high costs, especially later in life.

If you have big debts or limited retirement savings, it might be worth looking into. But for most people, continuing to save and invest is a better choice. Before buying a policy after retirement, take a good look at your finances and long-term goals.

8. Burial Insurance

Burial insurance might seem like a good way to cover end-of-life costs, but it often isn’t worth the money. Many experts say the payouts are small compared to the premiums, and some even call these plans predatory. A better option is using a regular life insurance policy, which often includes a burial benefit and gives your family more support overall. You can also simply save money over time to cover these costs yourself.

If you’re open to it, cremation is a cheaper choice than a traditional funeral. Funerals can cost $7,000 to $12,000, while cremation usually runs between $6,000 and $7,000. In most cases, setting aside money on your own is a smarter, more flexible way to prepare for these expenses.

9. Life Insurance Policies for Children

Burial insurance is often sold as a simple way to cover funeral costs, but it usually isn’t a good deal. The payout is small, and the monthly payments can add up to more than the benefit over time. Some experts even consider these plans to be unfair or misleading. A standard life insurance policy is usually a better option, as it often includes money for burial and gives your family extra financial help.

Another option is to save money yourself. Setting aside funds over time gives you more control and often costs less. If you’re looking to lower expenses, cremation is usually cheaper than a full funeral. In the end, planning ahead with savings or a broader life insurance policy is usually the smarter move.

10. Identity Theft Insurance

Identity theft insurance is sold as a way to protect you from fraud in your name, covering things like stolen credit card use or even lost wages during resolution. But in most cases, it’s not worth paying for. Credit card companies already offer strong protections, including zero-liability policies, and they’re usually quick to help when fraud is reported. Many cards also include free identity monitoring.

The process of fixing issues caused by identity theft is usually not as hard or time-consuming as the insurance companies suggest. Most people can resolve problems with a few calls and some paperwork. So, while it might sound useful, identity theft insurance often adds cost without offering much real value.

11. Collision Insurance on Older Cars

As your car gets older, its value drops—and that makes collision insurance less useful. Many people keep full coverage to be safe, but if your car isn’t worth much, you may be paying too much for too little in return. Collision insurance often comes with a high deductible, meaning small accidents won’t be covered, and larger claims might not be worth it after fees.

If you drive an older car, it might make more sense to choose the cheapest legal coverage and save the difference. That money can go toward future repairs or a replacement. This won’t work for everyone—if you rely on your car for work or drive long distances, you might still want extra coverage. But for many, dropping collision insurance is a simple way to save money.

12. Pet Insurance

Pet insurance might sound like a smart way to manage vet bills, but it often doesn’t save money. A study by Consumer Reports found that even with added medical issues, none of the plans for a 10-year-old Beagle ended up cheaper than paying out of pocket. In fact, only about half of the policies gave any real benefit to the owner.

Instead of paying monthly premiums, it may be wiser to save a set amount each month for future vet expenses. This gives you more control and avoids limits on what’s covered. Some insurance plans may deny claims for certain treatments, leaving you to cover the costs anyway.

In the end, saving your own money may be a better, more flexible option for your pet’s care.

13. Dental Insurance

Dental insurance might seem like a smart add-on, but it often comes with limits that make it less helpful than expected. While cleanings and basic check-ups are usually covered, many other treatments—like implants or even fillings—may only be partly covered, if at all. Most dental plans also have yearly caps, which means you might hit the limit fast if you need major work.

For example, if you need more than one set of X-rays in a year, you could be stuck paying for the rest. Before buying dental insurance, take a close look at what’s actually covered. In many cases, the money you pay for premiums might end up being more than what the plan saves you. It’s worth doing the math first.

14. Home Warranty Coverage

A home warranty can sound like a good way to avoid big repair bills for appliances and home systems, but there are downsides to consider. One major issue is the lack of control—you usually have to use repair technicians chosen by the warranty company. That means you can’t always pick someone you trust or prefer.

There’s also the risk of unexpected costs. You may have to pay a service call fee, and there’s no guarantee the issue will be covered. If the technician decides it’s due to misuse or something not listed in the policy, the warranty provider may refuse to pay.

Before signing up, read the policy carefully. Make sure the coverage fits your needs and that the company works with reliable, well-reviewed technicians.

15. Home and Contents Insurance

Home and contents insurance helps cover damage to your house and belongings from accidents or bad weather. It goes beyond basic homeowners’ insurance by covering things like a broken window from a stray baseball or damage from a car crashing into your home.

However, most standard policies do not cover natural disasters such as hurricanes, floods, tornadoes, or earthquakes. If you want protection from those, you’ll need to buy separate coverage. Even fire damage may be handled by a different type of policy, depending on the provider.

That’s why it’s important to read the terms carefully. Don’t assume everything is covered. Make sure the policy fits your needs, especially if you live in an area at risk for extreme weather or other major hazards.

16. Mechanical Breakdown Coverage

Mechanical breakdown coverage helps pay for non-accident-related repairs to your vehicle, covering problems under the hood and elsewhere. But these plans often have limits and fine print. Insurance companies might refuse to cover certain issues, especially if they decide the problem was caused by wear and tear, a pre-existing condition, or routine maintenance.

Before signing up, read the terms closely and make sure you understand what’s actually covered. Some policies aren’t worth the price and may leave you paying out of pocket anyway. In many cases, it may make more sense to put that money into a savings account for repairs instead.

Mechanical breakdown coverage can help in some cases, but only if the policy fits your needs and budget. Always compare options first.

17. Opting for Low Deductible Figures

When picking an insurance policy, a low deductible might sound appealing since you’ll pay less out of pocket during a claim. But there’s a trade-off: the lower your deductible, the higher your monthly premium. This can add up fast, especially if you rarely file claims.

For something like health insurance that you use often—say for your kids—a lower deductible might make sense. But for insurance you don’t use regularly, a higher deductible can help you save money over time.

For example, if you choose a $200 deductible and file one claim, you’ll pay that plus your higher monthly premiums. With a $500 deductible and lower premiums, your total cost for the year could be less. Think about your usual insurance use and budget before deciding.

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The article 17 Insurance Policies That Are a Complete Waste of Money—But Almost Everyone Buys first appeared on Survival World.