Why couldn’t somebody just put money in a savings account monthly instead of paying insurance monthly?
In: Economics
Most things insurance covers would require too much savings that the average person would struggle to cover, so banks and governments just do a blanket mandate in some instances. A bank won’t safely assume you will self insure your home or your car even. Even if you provided them proof of the money, that money isn’t guaranteed to stay there in the event you need it, so they require to have coverage before they give you a loan.
Having said that, most finance professionals highly recommend an emergency fund in savings that acts as sort of a universal insurance policy for things insurance doesn’t cover or for things you can cover and save yourself the premiums.
So you can self insure for things like your home appliances replacements, pet medical coverage, job loss, home repairs, car repairs among other things.
So you should have a savings.
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