"poor" may have been a poor choice of words.BogleMelon wrote: ↑Wed Jul 11, 2018 11:10 am- How much is your car worth comparing to your net worth?SwampDonkey wrote: ↑Wed Jul 11, 2018 1:25 amThat's not a fair statement. Many people maintain insurance for the security and peace of mind it provides, regardless of financial status. For example, even though I have no need for comprehensive coverage of my vehicles, I still pay for it as it provides peace of mind. Everyone has their own biases, often shaped by conditioning and their own personal experiences; obviously our experiences differ (not a bad thing!).
Appreciate your thoughts!
- If you won a $10 million lottery, would you keep the comprehensive insurance for the peace of mind? Would you really still care if a tree fell on your car roof and damage a car that is worth $30000 or even $60000?
- I don't insure my cell phone, because replacing a $250 cell phone doesn't worth a $10 premium, but I know a lot of folks who is doing it, and call it "peace of mind", I know also that they are broke and can not afford to pay $200 without adding more debts to their credit card.
being poor is relative. What I meant, is the relative meaning of wealth to the commodity you are insuring.
He meant once you have a certain amount, you don't need insurance. If, by your 60s, you'll have $2 million in investments, a pension, kids are gone, and Social Security checks coming in, do you really think that $100k insurance policy is going to be that significant?
Now, in your 30s, with 2 kids to feed, with $200k in investments, no pension, and no Social Security, that $100k life insurance payout is pretty big.
But I wouldn't say you were "poor". But the $100k is definitely worth something to you.
But, our point here is you ALREADY have $250k insurance policy right now and for the next 25 years where the $250k really means something.
Paying more now so that you can keep $100k of the $250k going after 60 when you will no longer need it doesn't make a lot of sense.