You are exactly right! All insurance is a losing proposition. That is why you self insure as much as possible. Only buy insurance on major things that will devastate your financial plan if they occur.
Examples of appropriate insurance:
If I pass away, my young family's financial future would be seriously jeopardized without my income, therefore I buy term life insurance to cover college and living expenses should I die. In 20 years when my term life expires, my kids are out of college, the house is paid for, and My wife will be a multimillionaire so everyone will be fine without the insurance. Everyone but me, of course, lol!
The same goes for a heart transplant or my house burning down: those would have an enormous impact on my world, so I carry medical and homeowner's insurance, too.
Examples of poor 'insurance' purchases:
Extended warranties and service plans - mechanical failures are most likely in the first few months of ownership (infant mortality, which is covered under the manufacturer's warranty) and again at the very end of the product lifespan (wear out period, which is usually after the expiration of even an extended warranty). A major breakdown between those two periods is extremely rare. I would add to anyone with a $60K toy has a ton of disposable income and can therefore self insure through the typical mechanical problems.
Whole life insurance is another ripoff, for reasons related to the discussion of term insurance above.
I apologize to the OP for extending this discussion far beyond the intended topic.
Last edited:
