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Financial Literacy - Insurance
National poll results
Many say it's essential, and just as many that it is a necessary evil. Surprisingly few say insurance is a waste of money.
Understanding insurance needs

Are Americans insurance-savvy?

While most people thought getting ID theft insurance was smart, they didn't think too highly of pet medical insurance, wedding insurance, trip insurance or legal insurance. Eighty-two percent of those surveyed deemed wedding insurance "silly." More than 50 percent felt that trip, legal and pet medical insurance were impractical investments. Consumers under the age of 50 were more likely to say that having ID theft insurance, legal insurance and wedding insurance is smart.

Savvy or silly?

The Consumer Federation of America's director of insurance expressed disappointment that so many people considered trip insurance, pet insurance and identity theft insurance as savvy. "They are not in the vast majority of cases," says the CFA's J. Robert Hunter.

Okumura was surprised at the high number of people who thought pet medical insurance was savvy -- 43 percent versus the 53 percent who considered it silly. "What this underscores is the emotional nature of sales," he says, arguing that paying $360 in annual premiums only makes sense if the pet is a purebred with papers. "But when you pay more in annual premiums than you would for a new pet, the decision crosses over from logical to emotional. Who can put a price tag on the relationship you have with Lucky?"

As for wedding insurance-supporters, he remarked, "It seems that people get it about right for wedding insurance. While relatively inexpensive, the probability of using this insurance is so small. I suppose, however, if you're planning a $100,000 wedding, it could make sense. Perhaps that's what the 20 percent who thought it to be savvy had in mind in terms of the cost of the wedding."

-- Posted: Aug. 20, 2007
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