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 http://www.statcan.gc.ca/pub/91-209-x/2013001/article/11785/tbl/tbl02-eng.htm 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: https://en.wikipedia.org/wiki/Life_insurance, https://www.insurancehotline.com/ten-times-a-life-insurance-policy-will-not-pay-out/.

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.