TL;DR: If you want to know whether getting insurance is worth it, use the Kelly Insurance Calculator. If you want to know why or how, read on.
Note to LW readers: this is almost the entire article, except some additional maths that I couldn't figure out how to get right in the LW editor, and margin notes. If you're very curious, read the original article!
** Misunderstandings about insurance**
People online sometimes ask if they should get some insurance, and then other people say incorrect things, like
This is a philosophical question; my spouse and I differ in views.
or
Technically no insurance is ever worth its price, because if it was then no insurance companies would be able to exist in a market economy.
or
Get insurance if you need it to sleep well at night.
or
Instead of getting insurance, you should save up the premium you would [...]
Outline:
(00:29) Misunderstandings about insurance
(02:42) The purpose of insurance
(03:41) Computing when insurance is worth it
(04:46) Motorcycle insurance
(06:05) The effect of the deductible
(06:23) Helicopter hovering exercise
(07:39) It's not that hard
(08:19) Appendix A: Anticipated and actual criticism
(09:37) Appendix B: How insurance companies make money
(10:31) Appendix C: The relativity of costs
First published:
December 19th, 2024
Source:
https://www.lesswrong.com/posts/wf4jkt4vRH7kC2jCy/when-is-insurance-worth-it)
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Narrated by TYPE III AUDIO).
