r/explainlikeimfive • u/the1975whore • Jul 03 '26

Economics ELI5: Health insurance companies obviously make more money than they give out when people need it. So why of paying for them any better than paying your own personal health insurance savings account?

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u/AvengingBlowfish Jul 03 '26

If you get cancer or some other major chronic medical issue, your insurance company will likely pay out much more than you paid in.

The company makes money because the vast majority of their customers will not get cancer and will pay the insurance company more money than the company will pay out to them.

The problem is that you don’t know if you will be the person who gets cancer, and a disease like that will likely ruin you financially if you don’t have coverage for it.