Many older people who are feeling financially squeezed are over-insured, or they are paying premiums for insurance policies that make no financial sense. By canceling these insurance policies, which rarely have any cash value, and stopping the premium drain they may save hundreds of dollars that could be used for things they really need.

Only the owner can decide whether it makes sense to walk away from an insurance policy. However, an annual review is always an excellent idea. Start with these kinds of policies, which most seniors find that they really don’t need:

Cancer Insurance, Heart Attack Insurance, Stroke Insurance

Each of these medical conditions individually account for only a small percent of possible health expenses. It is important to have medical coverage for all possible conditions, not just one specific disease. A much better investment is a comprehensive Medicare supplement policy, which in partnership with Medicare Parts A and B will cover most expenses for any disease or condition. Use the premiums you save to pay for a good Medicare supplement (MediGap) policy and get much broader coverage.

Hospital Indemnity Insurance

You have undoubtedly seen famous folks advertising that anyone can get $100 or more per day when they are in the hospital. While most of these companies do appear to pay as advertised, the average hospital stay is less than seven days and costs thousands of dollars per day. Much of the care and treatment that used to be provided in a hospital is now done on an outpatient basis, including “day surgery,” which does not qualify as a hospital stay.

Many hospital indemnity policies do not pay for recovery in a rehabilitation facility or at home. Although they may appear to be inexpensive, an average $35 per month hospital indemnity insurance premium would cover the average cost of a Medicare Part D premium with money left over. 

Mortgage Disability Insurance and Credit Disability Insurance

Neither of these types of insurance is useful for someone who is no longer working. Disability insurance payments are based on a percentage of the income someone was making while working. Someone who is no longer working is not making an income which would be covered by disability insurance.

Someone may have purchased mortgage disability insurance when he bought his home. He may have purchased credit disability insurance without realizing it when he opened a new credit card account. Review credit card statements and the checkbook for premium payments such as these which can be stopped. Someone who isn’t eligible to collect on the policy can almost certainly find a better use for these dollars.

Each individual’s individual financial and insurance situation is unique, of course. If you are in doubt about whether to cancel these kinds of insurance policies, get advice from a financial professional…your certified financial planner, your CPA, or a professional you trust.