Insurance 101?.........

Question

lets say health insurance or car insurance, if there is an accident, cant we just pay it off right on that spot? or does insurance have other benefits, coz i know how insurance some years isnt worth having but you still pay for it, is this just a system?

is it much cheaper if you do actually use it?

Answer 1

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Answer 2

It's the law.  In some states like California you can take out a bond instead or self-insure.  It is very risky to self-insure because then you take the whole risk and that could wipe you out.

An umbrella is a good idea for those that need more protection against lawsuits.

Answer 3

are you saying:

"i only want to pay for insurance if I actually have to use it".

no.  it doesn't work like that.

an insurance company is a BUSINESS like any other and are out to make money, like a fashion company or a food manufacturer.

where do you think the money would come from if no one paid into it unless they had a loss???

Answer 4

Go to Yahoo Finance, click on "Personal Finance" and read about insurance there.

Answer 5

Think about insurance as a "pooled risk".

If you suffer from a heart attack, this could potentially cost you 500,000 or so for any surgery or medical treatment.  However, if you have health insurance than you just pay your max out of pocket limit.  This could potentially be roughly about 2-5,000 within a year.

Same thing with auto insurance.  They way that auto insurance works is:

If something were to happen your pocket book opens from 0 dollars to the max of your deductible which could be as much as $1,500.  Then the insurance companies pocket book opens from $1,501 - $500,000 (or whatever your limit is).  Then if it's a major accident, your pocket book opens from $500,001 - ??????.

That is why in most cases auto insurance isn't enough just by itself.  It would be better to look into an umbrella policy or liability insurance.  This would protect you up to 2 million or so per year, and is extremely inexpensive.

Just my opinion though.

Answer 6

If you don't have anything major happen, it might be cheaper if you just pay for it. But how do you know something major will not happen to you-something you could not possibly predict?

Insurance is much more than what it costs you in monetary value. Often it is your peace of mind-that which allows you to sleep well at night knowing that you have that "ace in the hole" against major catastrophe.

Many times, insurances have contracted rates with providers that allow you to pay much less out of your pocket than you would have to pay otherwise.