Sometimes I honestly ask myself: Do we really need all this? Health insurance, liability insurance, home insurance, travel insurance, cell phone insurance (yes, that really exists). It feels a bit like those extra sauces with fast food. Ketchup is usually enough, but suddenly you have five things on your tray and you don’t remember why. It’s the same with insurance. And yet we pay for it. Every month. Quietly. Without giving it much thought.
And that’s exactly what I want to talk about here. Not in a prim and proper way, more like you would explain it to a friend over coffee who’s considering canceling their insurance because “nothing ever happens anyway”.
This strange feeling of security
Insurance companies don’t actually sell a product. They sell a feeling. Security. Peace of mind. A kind of mental airbag. You hope you’ll never need it, but if you do, you’ll be damned glad it’s there.
I still remember my first job vividly. My first real paycheck, my first time feeling like an adult. My father simply said, “Get liability insurance, otherwise you’ll be ruined someday because of a broken vase.” I laughed. A vase. Sounds harmless. Later, I learned that this “vase” could also be a wrecked car, an injured person, or water damage at a neighbor’s house. And suddenly, you’re not laughing anymore.
Ironically, surveys repeatedly show that people find insurance boring, but at the same time get extremely nervous when they don’t have it. On social media, you often read things like “Insurance is a rip-off,” and two tweets later someone posts: “Had an accident, luckily I was insured.” Pure irony.
What really happens when something goes wrong
Nobody plans an accident. Nobody wakes up in the morning thinking: Today would be a good day for a burst pipe. But that’s exactly the point. Insurance is for the days when everything goes wrong.
A friend of mine once had a minor bicycle accident. Nothing serious, he thought. A few scratches, a little blood. The end result: hospital, surgery, several weeks off work. Without health insurance, it would have been a financial nightmare. And this wasn’t an extreme case, not a horror movie scenario. This was everyday life.
A rather unknown fact: In Germany, billions of euros in damages are caused every year by everyday accidents, not by spectacular disasters. Not plane crashes or anything like that, but mundane things. Tripping. Falling over. Forgetting to turn off the stove. Boring, but expensive.
Insurance is like umbrellas
I like to explain insurance like this: An umbrella. If you have it with you, it won’t rain. If you leave it at home, there will be a downpour. Sounds silly, but it often feels that way.
Many people cancel their insurance policies precisely when they haven’t needed them for years. “I’ve been paying for 10 years and haven’t received a thing.” Yes. That’s actually the whole point. You pay for peace of mind. For the peace of mind that comes with knowing you don’t have to bear the brunt of everything alone.
On Reddit and Twitter (I still call it that), there are entire threads where people share their insurance fails. One guy writes that he canceled his home contents insurance, and two months later, he had a burglary. Karma? Maybe. Bad luck? Definitely.
Why our brain misjudges risks
Our brains are really bad at understanding probabilities. We’re afraid of flying, but drive without a second thought. Statistically, driving is much more dangerous. It’s the same with insurance. We often underestimate small but expensive risks.
Psychologists call this optimism bias. We believe that bad things are more likely to happen to others, not to us. Until they do happen to us. And then, in a panic, we Google at three in the morning: “Is it possible to retroactively report an insurance claim?”
A small side note: Studies show that young people in particular massively underestimate financial risks. No offense intended, I was the same way. At 22, you’re more likely to think about vacations than disability. At 35, you suddenly think completely differently. It’s crazy, isn’t it?
Save money or take a risk
Many people say: I’d rather save the money myself. Savings account instead of insurance. Sounds logical. But it only works if nothing major happens. Insurance is essentially a risk sharer. Many people pay a little so that one person doesn’t have to pay for everything alone in a serious situation.
Imagine you and a hundred others each contribute a few euros to a common fund every month. If someone’s house burns down, they receive help from that fund. Sounds almost like solidarity. And at its core, it is, even though insurance companies are, of course, businesses and want to make money.
A little insider fact: Insurance companies calculate their profit margins extremely tightly. They’re often lower than many people think. Comparison websites are more likely to get rich than the insurance companies themselves. Yes, really.
Which insurance policies really make sense?
This is where things get a little tricky, because everyone has a different opinion. My own personal, imperfect view: Some insurance policies are almost essential, others are more of a nice-to-have.
Liability insurance, for example. If you only have one, make it this one. Otherwise, a single mistake could haunt you financially for years. Health insurance is a given; there’s hardly any discussion about that in Germany. Disability insurance is often ignored until you know someone who suddenly can’t work anymore. Then you see the issue in a completely different light.
And then there are these mini-insurance policies for all sorts of things: cell phone, glasses, luggage. Some are okay, many are just marketing. On TikTok, you increasingly see videos where people “roast” their insurance policies and question why they’re paying 8 euros a month for coverage that only pays a maximum of 150 euros. Fair point.
The emotional side that no one talks about.
What’s rarely said: Insurance doesn’t just relieve you of financial burdens, but also mental ones. Stress drains energy. Fear of financial ruin is paralyzing. Knowing that a loss is at least financially settled allows you to think more clearly.
I once had a minor water leak in my apartment. Nothing dramatic, but the shock was profound. First panic, then a call to the insurance company, then a gradual sense of relief. In that moment, I was simply grateful. Not euphoric, not happy. Just calm. And that’s worth more than you think.
Why insurance companies still have a bad reputation
Let’s be honest: insurance companies have only themselves to blame. Small print, rejections, endless processing times. Everyone knows these horror stories. “They didn’t pay out.” That leaves a lasting impression.
But often the truth lies somewhere in between. Many claims are indeed settled, but hardly anyone talks about it. Who posts, “My insurance company did a good job”? That’s not viral content.
According to a study, over 90 percent of reported damages are at least partially covered. You rarely read about that. Bad experiences are simply more prevalent.
Ultimately, it’s about responsibility.
Insurance isn’t a gamble against life. It’s more like a backup plan. Like a safety net when climbing. You don’t want to test it, but you want it there.
I’m not saying you have to insure everything. On the contrary. You should understand what you’re insuring and why. Blindly signing up is just as wrong as blindly canceling. A little thought, a little gut feeling, a little common sense.
Perhaps we don’t need insurance because we’re pessimistic, but because we’re realistic. Because we know that life sometimes simply does what it wants.
And quite honestly: If everything goes well, you’re a little annoyed about the fees. If things don’t go well, you’re glad for every single euro you paid beforehand.
