#1
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Travel Insurance -EV?
These guys gotta be making their money from somewhere. I mean they can't afford to pay for all the dead / dying people at the expense of the living / healthy people unless there is more money being paid than money being spent. I don't want to be another one of these guys fish, I don't think I should get their insurance. I can see how it would be worth it if you were into extreme sports or something but I'm going to be a pretty inactive tourist for a few months, I think I'm just one of the donators in this scheme. Of course, I may suckout and get hit by a car or something but I don't really want to buy insurance and 'gamble' on that happening. Thoughts?
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#2
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Re: Travel Insurance -EV?
Insurance is by definition -EV. You're paying to mitigate the risk, by reducing the effects of variance.
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#3
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Re: Travel Insurance -EV?
mostly true, but not necessarily. Some insurance actually runs a negative underwriting return. Money is made by investing the money during the time it takes for the beneficiary to collect. Life insurance for one makes money this way since it is a looooong time befroe they expect to pay out.
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#4
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Re: Travel Insurance -EV?
In fact pre 9/11 it was true for almost all insurance companies, they would run slightly negative books to stay competitive, and make their money on the investments portfolio.
Mack |
#5
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Re: Travel Insurance -EV?
the only time to have insurance is when you know you are more than about two or three times the risk of an average person in that group.
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#6
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Re: Travel Insurance -EV?
[ QUOTE ]
In fact pre 9/11 it was true for almost all insurance companies, they would run slightly negative books to stay competitive, and make their money on the investments portfolio. Mack [/ QUOTE ] ok so don't buy insurance and instead invest it... I hope I didn't just hurt your head. |
#7
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Re: Travel Insurance -EV?
[ QUOTE ]
the only time to have insurance is when you know you are more than about two or three times the risk of an average person in that group. [/ QUOTE ] Ray, are you talking about all insurance, or just travel insurance? |
#8
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Re: Travel Insurance -EV?
Insurance is a negative-EV arrangement for you but usually a positive-utility arrangement. You gotta know/define the amount of money that you are willing to lose in EV just so that you are comfortable knowing that when the bad thing happens you are relatively protected.
If you find any kind of insurance that has positive EV for you, then either the insurance company has screwed up or your got to redo the calculations. |
#9
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Re: Travel Insurance -EV?
any insurance. it only makes sense when you know you are at a very high risk compared to the field that you are lumped in for premiums.
the only case that can be made for insurance is catastrofic kind like medical or for your house if its your major asset. and liability for many cases. |
#10
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Re: Travel Insurance -EV?
[ QUOTE ]
mostly true, but not necessarily. Some insurance actually runs a negative underwriting return. Money is made by investing the money during the time it takes for the beneficiary to collect. Life insurance for one makes money this way since it is a looooong time befroe they expect to pay out. [/ QUOTE ] That's still -EV for you, +EV for the insurance company. So your total premiums are less than the payout. Big deal. On average, the total utility of all premiums paid (which includes growth of the money if invested), over the lifetime of the policy, is less than the payout. You're keeping score the wrong way. |
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