3 Insurance Policies Worth Skipping

Figuring out how much insurance is enough can confuse even the savviest of consumers. While there's always the risk of buying inadequate coverage, there's also the danger of wasting money on unnecessary products.

Some policies cover such specific incidents, for example, that the chances of ever cashing in on them are slim. Others are redundant, providing coverage that's already included in more comprehensive plans. Often, such coverage is sold as a supplemental policy or rider. And while this coverage is legitimate — your heirs will get paid if you die in a car accident and you're covered by accidental death insurance, for example — the premiums paid often don't justify the potential payouts.

Instead, consumers are better off buying enough of the critical insurance they need, such as homeowner's, auto and, if you have children, life, says Kim Holland, the Insurance Commissioner of the Oklahoma Insurance Department.

To decide which policies are worth the investment, Bob Hunter, the director of insurance for the Consumer Federation of America, suggests consumers ask two questions: Will the policy protect against a catastrophic loss? And is the policy comprehensive? Air travel insurance, for example, doesn't make the cut. If a man dies in a plane crash, there's no need for the additional insurance. His life insurance policy already covers him, explains Hunter.

Here are three more insurance policies worth skipping.

Dread disease insurance provides benefits for a specific ailment, such as cancer. However, even if breast cancer runs rampant in the family, the added coverage isn't necessary. Comprehensive medical insurance covers policyholders no matter how they get sick, says Amy Denise, editor of insurance information site Insure.com. (This is also the case with critical illness insurance, which covers a handful of major ailments, including heart disease and stroke, that also fall under comprehensive medical plans.)

Don't think that buying a cancer policy will guarantee twice the insurance money should you receive a malignant diagnosis. Many basic health insurance policies contain a coordination of benefits clause stipulating that it won't pay duplicate benefits, warns the Wisconsin Department of Insurance. So anything the cancer policy covers, the regular medical insurance policy won't.

A better choice: If you aren't already covered by major medical insurance, buy a plan. Also, consider a disability policy, which will cover a portion of your income should you have to take medical leave.

(For more advice on buying health insurance, read our story. And for more information on disability insurance, click here).

Parents with these policies receive money to help pay for burial costs should their baby die. But if the child lives to be 18 — and they're covered by a whole life policy rather than a term life plan — they can tap into the cash value of the policy for college expenses. The other big selling point: low upfront costs — less than $200 a year can buy $25,000 in coverage.

The problem is that life insurance is meant to replace lost income should the breadwinner of the family pass away. And while it's sometimes used for other purposes, including estate planning, infant life insurance is not a very effective way to save for college since policyholders are assessed added fees for the life insurance component, says Insure.com's Denise.

A better choice: Parents should buy enough life insurance for themselves first. There's a far greater chance that something will happen to them than the child, says Byron Udell, founder and chief executive officer of insurance website AccuQuote. And while the savings component of infant life insurance policies may seem attractive, parents could earn a lot more by investing in a tax-free 529 college-savings plan instead. (Read our story for more advice on saving for college.)

Pet insurance is sold as a way to help pet owners defray some of the costs associated with vaccinations and other veterinary care. Add up all of the vet costs over an animal's lifetime, however, and it's clear that, in most cases, pet insurance isn't worth the money, says Consumer Federation of America's Hunter. A comprehensive policy that covers everything from vaccines to surgery can easily cost $700 a year for a cat or dog, according to ASPCA Pet Health Insurance.

If the cost doesn't scare pet owners away, the coverage might. There are no $20 co-pays with pet plans. Instead, owners pay for all veterinary care upfront, and then get reimbursed a flat fee. Coverage is also spotty with many disease exclusions for purebred animals. And some policies won't cover an ailment from one contract year to the next. A cat diagnosed with diabetes, for example, may be covered one year, but not the following year since it's considered a preexisting condition.

A better choice: If you have an older pet and worry you won't have the money to cover a major ailment, consider "accident and illness" pet coverage instead. These policies are much cheaper — about $170 a year for a cat or a dog. And for routine care, you're better off paying out of pocket, says Kim Saunders, vice president of shelter outreach for Petfinder.com.