[SkyLemon]

Insurance is never a good deal. They are betting you’ll never use more then you pay and you are hedging that the day you really do need it, it’ll be worth it. Anything an insurance company covers out of pocket is purely them hedging that those services will save them money in the long run or they have factored it into the price you pay up front.

So yes, insurance is never worth it... unless it is... and then often it really was worth it all along.

[dghlsakjg]

I doubt this is true for health insurance, but for many competitive insurance industries insurers will frequently break even or even take a loss on premiums. Warren buffet explains it well in his letters to investors.

Basically, insurers make most of their money by investing the float, so their incentive is to have a bigger float by offering competitive rates to bring in more customers. They don’t really care if they pay out every dollar they take in, because they made money by holding onto the premium in the time in between when you paid it and when a claim was made.

So for things like car insurance, it actually is a pretty good deal. Many companies expect to pay out as much as their clients put in, with the added benefit that you can take out more than you put in if you have a claim immediately after getting insured.