Quote:
Originally Posted by Gangplank
Out of curiosity do you buy health insurance? Same principle applies of course. Some will & some won't come out ahead. Bigger macro economics at work are that these companies take in premiums, roll the investment, and expect their profits to exceed the claims. Even if they lose money on certain models or brands they make it up in the time value of money vs. investment and cost.
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I am thinking that there is a similar thread in the bowels of this board and that you posed to me the exact same question in that earlier thread. Intrepid searchers are implored to find that earlier post and responses, and see if we are consistent!
My answer to your question would depend on whether I am who I unfortunately am, or if I were Warren Buffet or Donald Trump.
If I were Warren Buffet I would not buy health insurance, most probably, since anything that would happen to me I could afford to pay for in cash and it just wouldn't be worth the effort to fill out the forms and deal with the insurance company (forget for the purpose of this discussion that he would be on Medicare so he wouldn't really need to pay much for basic coverage).
Similarly, if I were Donald Trump, the taxpayers would pay for my medical care for the rest of my life, so I'd not bother with health insurance.
So now we get to me personally, unfortunate serf that I am. Were I to need a bone marrow transplant, for example, that could bankrupt me. Even though the odds of my needing that are small, I would not want to deal with that or anything similar so I would elect to pay for health insurance.
Getting back to a vehicle, let's take a hypothetical 135i that might be worth $20 or $25K at the present. By definition, the most that one could lose on that car would be its present value, because you could always have it hauled to the dump or donate it to Father Joe or whatever; that is your downside. If you financed the car and the car is worth less than you owe, then of course your downside might be a little bit worse than that. But, unlike your life, the downside would have a definite financial cap on it.
Am I personally willing to accept the possibility that when my car goes out of warranty that I might need to place that call to Father Joe? Yes, I can deal with that.