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5 Insurance Policies You Don't Need

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You can buy insurance that covers nearly any risk you can think of -- including alien abduction and excessive rain -- but that doesn’t mean it’s a good deal. To see if insurance is worth buying, Robert Hunter, director of insurance for the Consumer Federation of America and former Texas insurance commissioner, screens for what he calls the two C’s: catastrophic loss and comprehensive coverage.

First, is the potential financial loss the kind you’d experience with the death of a breadwinner, a fire that destroys your house or a bad auto accident? “If it’s not catastrophic, don’t buy the insurance,” Hunter says. Second, you don’t want to buy “little pieces of insurance,” says Hunter. That’s where the comprehensive test comes in. Some coverage protects you against legitimate risks, such as death or disaster, but not in the most cost-effective way. And some policies have so many exclusions that they may not pay out if the risk you’re most worried about actually happens.

Here are five widely sold coverages that you probably don’t need -- plus better ways to protect yourself.

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