Simple Answers To Financial Questions - Part 2

May 31, 2012

Interview with Jack Otter, author of the book Worth It ... Not Worth It?: Simple & Profitable Answers to Life's Tough Financial Questions

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Mike Carruthers:
When you rent a car should you buy the extra insurance just in case?

Jack Otter:
The fact is the vast majority of people don’t need that insurance it is redundant. If you own your own car then you’re insured for driving that rental car.
 

Jack Otter Executive Editor of CBS Money Watch and author of the book Worth It ... Not Worth It...

Plus many credit cards actually give backup insurance. So for instance your deductible, the credit card company might actually pay that.

Credit or debit Jack says credit cards are fine as long as you pay them off every month and if you do use a debit card to buy something be careful.

So for instance if you take a debit card and use that to buy gas, if you just say get 30 bucks worth at the gas station. The gas station might actually put a hold on 80 dollars; 100 dollars which would be the average fill up. A hotel will also do the same thing and the problem is that you can acutely overdraw your account even though you have the money because that money’s effectively frozen.

Should you buy term life insurance or whole life?

The vast majority of people, more than a 99%, 99.5% of people are better off with term insurance. With whole life insurance the problem is it is so expensive that most people can’t afford to get enough and some people can’t even afford to keep up with their payments if their cash flow changes and they end up forfeiting the policy.

To hear the complete unedited interview, click here.