Let me start off by saying I do think insurance is a good idea. Let’s face it having some coverage when REALLY BAD things happen is a smart move. I don’t like paying for insurance for things that are SO minor that I’m amazed they sell the product or have a minor impact on my financial well being.
Case in point. There was a parents meeting last week at my son’s school. We got copies of the school calender and then an optional insurance flier. I read the cover and had to cover my mouth not to start howling with laughter. A company was selling health insurance for kids. I kid you not.
The cover featured a little story about a kid who fell at school and broke an arm and had to have some dental work done. It then went on to mention even with having insurance at work, the family still had to pay $750 in expenses. I sat there reading this thinking “Ok, so what? Isn’t that what an emergency fund is for?”
Then it occurred to me. Ok, how likely do you think it is that ever parent in this room has an emergency fund of some kind? I would bet most of my retirement savings on the fact most of them didn’t have one at all. So hence the marketing campaign on this product which likely does sell to some people out of fear.
Likely it works too and they get a few sales every year. It is rather sad that people don’t realize how easy it is to sell insurse yourself for things under a thousand dollars. Just save up $1000 in a high interest account and sit on it. If you need it use it, but if you don’t use it save the money you would have spent on insurance towards something else. It’s amazing what you can save by taking on a little risk yourself.