Why does insurance make sense?

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Does buying insurance makes sense for someone with very frugal money habits? I always feel like I’m losing out by buying car insurance. I am extremely frugal, only spend about 25% of my after-tax income, and rest are invested in low-risk bonds and index funds. I also maintain 2 years worth of living expenses in a savings account.

So my question is, what does an insurance buy me? I can afford to pay off in cash if something bad happens. Isn’t it a waste to pay insurance premiums?

In: Economics

9 Answers

Anonymous 0 Comments

> So my question is, what does an insurance buy me?

An auto accident can EASILY cost upwards of $100,000. At an insurance premium of $150 a month if you have that accident more than once every 55 years you come out ahead.

Insurance is you paying a little every month so if shit goes very wrong you don’t end up broke.

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