1. Car Rental Insurance
With options such as loss damage waiver, liability and personal accident insurance, car rental agreements have a seemingly endless list of possibilities that will jack up the cost.
Get it if: you'll be adding authorized drivers who aren't on your plan, or your personal auto insurance coverage is limited (e.g., you don't have collision or your deductible is very high). Just know that "if something happens to your rental car and you file a claim with your existing insurance company, your premium may increase and you could pay more in the long run than if you had bought a policy for the rental car," says John Egan, editor in chief of InsuranceQuotes.com, an insurance rate comparison site. However, if you already have coverage, it's usually okay to forgo car rental insurance, says Jeanne M. Salvatore, consumer expert for the Insurance Information Institute, as long as you make two phone calls to be sure. "One is to your car insurance company, and the other is to the issuer of the credit card you'll be using to rent the car to check the kind of auto coverage you currently have," she says. Many credit card accounts include secondary coverage that supplements your personal auto insurance when you pay for the rental with that card.
Timing: You can usually decide whether to purchase at the rental counter.
Watch out for: coverage when traveling on business, since your personal auto insurance might not apply. Check with your insurer beforehand.
2. Long-Term Care Insurance
A policy can cover daily care that goes beyond what basic health insurance encompasses, namely nursing home, assisted living or home health care expenses. When researching options, consider factors such as daily benefit (which defines the maximum available to pay for daily caregiving), length of coverage (five-year plans are most popular) and wait time (how long before the benefit kicks in).
Get it if: planning for the future is important to you, and you have the funds to do so. About 70% of people over age 65 need long-term care services at some point, according to the Department of Health and Human Services' National Clearinghouse for Long Term Care Information. While it's usually cheaper in the long run to buy it when you're younger (say, in your 40s or early 50s), purchasing it when you're in good health is crucial too because the premium is much lower and you're more likely to get approved.
Timing: Family health history is a factor, so if something like heart disease is prevalent, purchasing sooner rather than later is wise. Most pre-existing health conditions make it very challenging to get affordable coverage.
Watch out for: premiums that may not be fixed and could increase at any time. It's also smart to check now whether the policy pays the facility directly or you'll be required to handle expenses out of pocket and wait to be reimbursed.
3. Identity Theft Insurance
When an identity is stolen, expenses for paperwork and legal fees to restore accounts and clear the victim's name generally follow. Those costs may be covered by this type of insurance.
Get it if: monitoring your accounts tends to slip through the cracks. "We're all equally at risk for personal identity theft," says Salvatore, so this is a matter of personal preference. If you regularly keep tabs on your credit by requesting a free annual credit report (at annualcreditreport.com), and review statements each month, that should be enough to stop any potential problems. "Also, some home and renter's insurance policies offer ID theft coverage," says Egan.
Timing: An ID theft policy can be taken out at any time.
Watch out for: the fine print. ID theft insurance reimburses only the costs to recover from identity theft; it does not cover monetary losses caused by the theft.