Why couldn’t somebody just put money in a savings account monthly instead of paying insurance monthly?
In: Economics
Insurance savings would work if you only ever had incidents at the end of your life after saving for years and years.
Insurance is optimal when you don’t know when a catastrophic event will happen, and when the event is so extremely costly that even saving for your whole life will not cover if (some med bills)
Like if you’re a 25 year old who’s been driving for 7 years and you total your car, it’s unlikely that your insurance savings will be enough to replace your car.
Insurance basically gives you the ability to access the money up front.
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