Insurance is a Waste of Money! And Which? Tells us Why

Banks and financial firms are forever dreaming up new ways to sell insurance products that no one wants or needs.

Despite scandals like the billions of pounds of compensation paid for fleecing customers with payment protection insurance that failed to deliver, they seem to never learn.

Consumer champion Which has put together a list of insurance that cost hard-earned cash without delivering a worthwhile return:

  • Mobile phone insurance – Around 9 million phones were reported lost over the past five years, and with iPhones and other top-of-the-range gadgets costing several hundred pounds to replace, insurance seems a good call.

The trouble is mobile cover is not cheap at around £180 a year and many home contents insurance policies offer the same cover at a fraction of the cost, even if you are a student living away from mum and dad.

  • ID theft – Fraudsters stealing your personal bank and card details are less of a threat than finance firms charging up to £70 for limitless cover already offered as standard by most credit cards under Financial Services Authority rules.
  • Payment protection insurance – The dreaded PPI missold to millions by banks and building societies. If someone hints at selling PPI, speak to an independent financial adviser about income protection cover instead.
  • Over 50 funeral plans – However enticing the free gift from Michael Parkinson may seem, put the money in to savings instead. The plans are poor value and stashing the cash means it’s there when needed and earning interest.

“They’re really poor value and will almost always leave you worse off if you take one out,” said a Which spokesman. “We worked out that a 60 year old could pay in more to a cash Isa than he could get back from an over 50s plan if he died at age 73 – a likelihood given life expectancy is now over 80 for men.”

  • Water pipe insurance – Utility firms offer protection against dealing with burst pipes, like mobile phone cover, this is generally covered by buildings insurance as standard, so why let £35 a year drain away for nothing.

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One Response to Insurance is a Waste of Money! And Which? Tells us Why

  1. Which is absolutely right, these fabricated products are a complete scam in my view. £180 to cover a phone for a year that may only cost £180 to replace if you had to buy a new one seems insane – you’d be better not buying the insurance and if you lose the phone then just buy a new one. If you don’t lose it then you are £180 better off. But while these sorts of insurances are scam filled, do not tar home insurance or landlord insurance or car insurance with the same brush – they are real products with real deliverables at significant values and in the case of car insurance a legal requirement. Not all insurances are the same.

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