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What? Of course there is a dollar amount where people switch from "worth it" to "not worth it". Here is a thought exercise. Would you buy the same insurance pla
by hervature 4y ago
What? Of course there is a dollar amount where people switch from "worth it" to "not worth it". Here is a thought exercise. Would you buy the same insurance plan for $0. Of course, it is free. Would you buy the same insurance plan for $500,000. No of course not, that's the payout. Everyone has a different dollar amount in between based on the risk aversion, their own valuation of "peace of mind", and their perceived likelihood of using it.
- aabhay 4y agoYes of course there is a dollar amount where it stops becoming worth it, but the primary rule is simply whether the amount is sufficiently negligible. It is not whether the amortized return on investment beats the specific dollar amount. As a thought experiment, would you pay $500,000 a month if the payoff was $5B?