Why do people pay for insurance? If they have the money to ensure protection in the case of damage or loss that isn’t guaranteed, why not save the money for when something actually happens?
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Because depending on the nature of the insured event you may never be able to save enough to cover that situation.
Eg. Insuring your $3000 car for $50 a month gives you access to millions of dollars of cover in case of being sued if someone dies in that car crash. It also gives you a level of cover in case you were at fault and the other car needs repairs.
Saving for 60 months would give you the $3000 replacement value of your car, but it wouldn’t cover costs to other vehicles or property affected, being sued for being in the wrong etc.
I guess the point is that for a much smaller outlay of capital you are covered in reasonably large quantities for an array of different events, something you could never achieve just by saving. This is applicable to almost all insurance types.
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