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
Well, let’s say you get in an accident in which two people are killed and three more are seriously injured and will suffer life-long disabilities. You’re found to be at fault. Unless you’re able to fork out several million dollars in compensation, you’ll be glad to have insurance.
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