Difference is pretty big and obvious in this case. Insurance is...

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theworst911

335 Posts.

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04/10/18

12:03

Post #: 35993185
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Originally posted by whartanto ↑

I am not a big fan of insurance in general, but I still don't get your argument.

Technically, I can always not insure my house, my car (except for the 3rd party due to government regulation), my health and instead put the money into my "rainy day" savings that cover the day when I need hospital coverage, new car or new house after the old ones burn down / get into accident (after all insurance is an inefficient business, for every $100 premium I put in, on average people get back less than half in claims, the rest goes to the overhead, marketing etc of the business).

Insurance is always a crappy value until your house burns down, you get into an accident, or there is flooding/fire. All the time I paid for house and content insurance for decades when my house didn't burn down... what a disreputable business they are

Or perhaps people should understand that insurance is a bet against something happening. If I buy house and content insurance and my house didn't burn down that year, I am not being scammed. I am just buying the peace of mind that if the worst do happen, I am covered.

Same with life insurance, if you don't die the year you bought it, that's just how insurance works... Do you expect that people just buy insurance on the right year when they will die and buy house and content insurance on the right year when their house will get burn down?

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Difference is pretty big and obvious in this case.

Insurance is needed if the value of your insured item is significant. Think house, cars (if not your car, third party - think if you happen to crash into a Ferrari), health and life if you are the sole income earner for the family or if you work a physical job. No matter how small the chance of losing or damaging the insured item, you should have insurance to cover as the cost to replace is significant (multiples of ones yearly salary and the insured item is an essential) (health is arguable as we have medicare).

Some insurance such as funeral, diamond rings, car excess during rentals (excess is capped) are limited in value and could be paid for within a few months of salary, not multiple years.

This is why big companies self insure, when they get big enough. They are happy to bear the cost of something going wrong coz they can earn it back within a few months even if the insured items are worth 10m, not multiple years

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0 Great analysis

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