I paid for an extended warranty on the first car I ever bought. Turned out it didn't cover any of the things the salesperson cited as good reasons to pay for it, and to maintain the warranty, I'd have to pay the dealer for all maintenance - even oil changes.
That car never needed any repairs, but seeing the list of exclusions convinced me to never pay for an extended warranty again.
If this were true, it would result in a loss for the issuer of the warranty.
You wouldn't pay someone else to insure a common vegetable, because it is so low cost that if it turned out to be bad, you would just buy another one (or have bought extra as your insurance).
When you buy from Walmart/Target/Amazon/Best Buy, they will try to sell you insurance for a $30 toaster or other cheap appliance. Again, most people will not buy this because they will believe the appliance will work sufficiently long or that the warranty process will be too time consuming, or otherwise decide that just quickly replacing the cheap appliance with another is the preferred way to insure it.
The insurance seller is a business and has to earn more than what they pay out for claims (or at least to make payroll if it is a mutual insurance company). Otherwise, they are going to lose money over time and go out of business. If you financially benefit from it, then you are either lucky, or had an information edge over the insurance underwriter.
Of course, if you get peace of mind from buying insurance, and count that as a benefit, then most insurance is beneficial in that case.
https://news.ycombinator.com/item?id=44490667
Insurance seller has to earn at least enough for payroll, so at least some of the premiums go towards that instead of any money received from claims.
Investment earnings cancel out because both the insurance buyer and insurance seller have access to same returns via broad market index funds. I.e. you can self insure and get the same returns on your savings that the insurance seller is going to get if you gave them a premium.
