One of the tenets of insurance is that you can't profit from a loss. If your house burns you can't use insurance to make a "better" house for you. I have no disagreement with not profiting from a loss, but I argue that you can profit from the purchase of insurance.
Can you profit from securing a mortgage on a home? Absolutely. If you borrow $100,000 to purchase the home and some years later you sell the home for $200,000, then even with all the principal and interest payments and the maintenance and the taxes, you'll still have profited from securing the mortgage. Such is the nature of leverage.
Would you open your own legal practice without legal malpractice insurance? Would you buy a home if it wasn't insured against fire? Would you lock-up your money into a retirement plan if you thought you'd need it to pay for heart surgery?
We want to make decisions about our money, our experiences, and our careers based on how they benefit and profit us and our families. Sometimes we want to embark on a effort to improve our financial position but we need leverage to accomplish it. What we call insurance is really just a leveraged financing of loss which allows us to allocate our money and our attention elsewhere in the direction of things that bring us profit and advancement.
Next time you review your insurance think of what having it allows you to do. Even if it's only providing peace of mind, how does that make you live happier?
