Insurance please save me

I was always wondering how life insurance works, and why so many people are buying it. I will compare common insurance policies with statistics canada lead causes of death.

As canadian, I’ll die from cancer or heart disease. But the following table shows that mortality rate of 30–50 years is less than 4 (out of 1000). Using a decision tree, we can calculate the real cost of such event: for an amount of $200,000 insurance x 0.004 probability = $800. Currently the insurance asks $40 per month. This is $9,600 per 20 years, which is a 12x return of investment. But this is not all.

Before getting an insurance, I would have to pass a medical exam, that will check my medical history for the likehood of requiring a claim. If they would consider that I’m at risk, I would pay even more.

Other reads:,

At the end of the day, what do I want my family to do after me passing away: taking on their lives or fill claims and prove to the insurance that I was not doing anything high risk, no sickness or disease.

Now I will go and open a Savings account that would cover this probability. And those money I will likely spend — on funerals or a Porsche.