What is the point of putting money into an insurance company if they will never administer you more than this amount
As Mbrcatz17 stated, it is not intended to be an investment or savings rationalization to get out what you put contained by, plus a little extra. First of adjectives, you do not "invest" $100k to cover $100k, that would be rather rediculous. No one does that, or could. You pay cheque a monthly or annual premium which is much smaller than the amount you are covering. Besides, if you ask for coverage of $100k, they will pay upto $100k. You dont capture extra because you feel approaching you should & if your claim is for $73k, you also will not get $100k, you will return with $73k.
If you want to play Vegas with your insurance, freshly allow a catastrophy to happen right after you engender your 1st payment. Then, you singular put in $500 & get a $100k payout! That will show them! Keep in mind that you may go and get denied due to suspicion & you may not be able to be insured again after that, but you would hold taught them a lesson at lowest.
I know it is popular to beat up on insurance companies/agents & how they rip you past its sell-by date by denying your claim that you thought was covered but realy wasnt, or they charge you other only because you are a highly developed risk, or dont cover things at all that they know will cost them thousands extra and so on. But explicitly done by those who dont understand what insurance is, or how it works.
If you want to invest your own money and hope you'll hold enough to cover doesn`t matter what the emergency is then you don't requirement to buy insurance. Just make sure that you hold enough to replace your home and adjectives your belongings as well as medical and dental, replace your motor (or someone else's) and enough to cover if you ever win sued.
To me, it's worth the $100/year for the multi-million dollar umbrella policy.
Answers: Insurance is NOT an investment. As you so clearly indicate, it's not INTENDED to "get your money back". That would be a SAVINGS description.
Insurance is a tool to TRANSFER RISK. That means, you rate a small (relatively) regular amount, in exchange for the insurance company taking the potential (but not unqualified!) financial hit - a much larger loss - if a particular something happen.
Example: You pay $100 a month for coup¨¦ insurance, but if/when you have an happenstance, the insurance company is on the hook for potentially a hundred thousand dollars - or even more. You CAN afford the $100 a month (even if you resent it) but likely CAN'T afford the six numeral loss, if it should happen.
Second Example: You repay $300 a month for health insurance. Sure, you'll probably put contained by about $500 of claims, but if something big and bleak happens (think appendix removed, or an emergency C fragment, or God forbid, cancer) again, the insurance company will pay hundreds of thousands of dollars that YOU can't afford to salary.
If you want something that will give you your money pay for, put it in a stash account. BUT, if you want to verbs the risk of something catastrophic happening, that would set off you with your wages garnish until you're 80 so you'll never OWN anything, buy insurance.
** RUN THE NUMBERS. It doesn't WORK that way. You DON'T hold $100,000 in premium (remember, it's NOT an investment!), EVER. Figure, a house insured for $100K, probably costs give or take a few $500 a year for insurance. In order to reward in $100,000, you must reward that premium FOR 200 YEARS. Please! And you WILL have a few claims contained by that 200 year time! MOST people own a homeowners claim once every 5 - 10 years. Some have them more commonly, some less, but that's something like the AVERAGE. Maybe 1 in 100 claims is a TOTAL LOSS, but in attendance are lots of five figure partial losses.
The point is - even if you income cash for your house, unless you can afford to settle up out a second time, $100,000, it's SMARTER to pay the insurance company the $500 a year, and do something ELSE next to your $950,000. Even if you put it in a CD, it will receive more money than $500, AND you get rewarded if you have MORE THAN ONE CLAIM!
Insurance companies DON'T produce money from the premiums you pay contained by. The average homeowners carrier pays out $1.07 surrounded by claims for every $1 they take within, in premium.
They cause their money, by investing the reserves - the money set aside to pay claims. THAT'S where on earth their profits are. AND it makes the extra money they want, to pay their claims, and hold premiums lower than claims payouts demand.
First I will assume you are conversation about existence insurance. If that is the crust I have never see a life insurance policy that over a vivacity time would ever cost more than the death benefit.