It’s no secret that financial dealings are rarely anyone’s idea of a good time. On the contrary, most of us shy away from doing our taxes until the last possible moment. However, even though they may be dull, our finances should always be in order, especially when it comes to insurance. Insurance policies are the ones that keep us, our families, and our businesses safe during unpredictable times. If we’re not well versed in their language and modus operandi, we’ll end up with incomplete coverage and what is popularly known as junk insurance – unnecessary insurance products hidden in the fine print. While people outside of finance rarely hear of it, junk insurance is ever present in our policy agreements. As a result, this article is dedicated to tackling the problem of junk insurance and how to get out of it!
Junk insurance is _____?
Before finding your way back from junk insurance expenses, it would be helpful to know what it actually is and how you ended up paying for it. The unofficial but catchy term ‘junk insurance’ refers to add-on insurance – overly expensive policies that usually come attached with credit cards and loans. In the majority of cases, these add-on policies will provide coverage for events you’ll neither need nor understand. At their core, junk insurance add-ons serve to take advantage of uninformed customers and trick them into paying additional yearly fees that sometimes amount to over $2000. While they all function similarly, there are different kinds of add-on insurances, with the most common being consumer credit insurance (CCI) and guaranteed asset protection (GAP).
Junk insurance is refundable
It’s safe to assume that at least one person who’s reading this article has just discovered that they’ve unknowingly been paying for unnecessary coverage for years. Fortunately, not all is lost as junk insurance is refundable. However, while you can get your money back, banks and insurance companies aren’t keen on making this a walk in the park. The process is time-consuming and has been known to lead to more than a few headaches. Because of this, it’s always best to seek out a service provider to help you with your insurance refund. These companies specialize in insurance claims and will be familiar with all the paperwork and legal procedures that come with the job.
Consumer credit insurance (CCI) – and how to avoid it
For those lucky few that still don’t have any type of insurance policy in their name, consumer credit insurance (CCI) is the one to look out for. It is by far the most common kind of junk insurance, as banks and insurance companies attach it to everything from credit cards to car, home, and personal loans. While the name may not give it away, consumer credit insurance provides coverage in cases where customers are unable to pay their minimum loan due to unemployment, disability, injury, or death. Even though CCI is completely refundable, it’s also not necessary. Thus, if you’re choosing an insurance policy just now, you can always opt out of it and save yourself the paperwork!
Guaranteed asset protection (GAP) – and how to avoid it
Guaranteed asset protection (GAP) is the most common form of junk insurance for car owners. This kind of additional insurance is designed to cover the difference between the car loan repayment you have and the amount that the car insurance policy covers. While most companies will try to sneak it into any package, it is officially only part of the all-inclusive insurance package. Thus, if you’re looking into purchasing a new car, be on the lookout for guaranteed asset protection policies and explicitly note that you’re not interested!
Regardless of whether you’ve dealt with insurance policies before, knowing what junk insurance is can only help your finances further down the road. Once you go over the fine print, you’ll know if you’ve been scammed and if it’s time to file the paperwork for an insurance refund!