4 ms·

> Presuming you mean ending with more money than you started, gambling isn't either. That's true, but it doesn't mean insurance and gambling are the same thing

by pdonis 2y ago

> Presuming you mean ending with more money than you started, gambling isn't either. That's true, but it doesn't mean insurance and gambling are the same thing. > These are the same thing dressed in different names. No, they're not. In gambling, I accept the risk involved in a wide variance in payoffs, for the entertainment value involved (since I can imagine that I might be a big winner); on net I am paying money for entertainment. In insurance, I transfer the risk involved in a wide variance in payoffs, for the peace of mind of not having to worry about being bankrupted if a rare but catastrophic event occurs; on net I am paying money for peace of mind (since I don't have to imagine that I might be a big loser). > Consider term life insurance instead But your next of kin only gets a payout if you die during the term. If you don't, nobody gets any payout and all the premiums you paid are lost. Which, since insurance companies make money selling term life insurance, is the expected average result. So on net, you do not make money buying term life insurance--but, as above, you might still do it if the peace of mind involved is worth it to you. > your next of kin does just actually get a fat check. But they are losing you--and even if we go to extreme cynicism about that, they are losing whatever income and other goods and services you provided, for which the check will hopefully be enough to compensate them. So it's not a pure gain with no offsetting loss, even leaving out the premiums paid.

BugsJustFindMe 2y ago
> But your next of kin only gets a payout if you die during the term. If you don't, nobody gets any payout and all the premiums you paid are lost. Yes, aka gambling. > But they are losing you That is true AND it is not what you paid for. Just like health insurance isn't paying for health but rather for coverage of bills related to loss of health. Being healthy is a win for health but not a win for buying health insurance. Being alive is a win for living but not a win for buying life insurance.
- pdonis 2y ago
  > That is true AND it is not what you paid for. You're qubbling. You paid for replacement of the income and goods and services you can no longer provide, in the event of your death. Sure, that doesn't replace you in the eyes of your beneficiaries (assuming we're not taking the extremely cynical viewpoint about that), but of course nothing can replace you in that sense. However, if your beneficiaries are financially secure enough that they do not need the insurance payout, i.e., if they're not depending on you for income or goods and services, then you should not be buying life insurance: you should be spending the premiums on something with a positive expected rate of financial return. The only reason to buy insurance in the first place is if your beneficaries are depending on you and will need something to replace you financially if you are no longer there.
  - adw 2y ago
    No, the other poster is actually right. In betting on outcomes, there are two roles - bet (“long”) and lay (“short”). An insurance company is exactly a bookmaker; they are buying a bunch of risk and being paid a vig (or in the case of long-duration bets and life insurance, getting the carry) on each of those risks. This is indistinguishable from insurance, particularly when the beneficiary of insurance isn’t the subject (key-person insurance, for example, which you can view life insurance as a form of). You’re saying that because these are morally different - which I don’t actually believe, given that options trading is another equivalent form of hedging/speculation, but I will grant - these are different things. But “fire which I use to cook dinner” and “fire which I use to torch a car during a riot” are both fire; the goal is different, but the object used is not. Let’s say I hedge a bunch of political risk by betting on politics. How is that different from buying a custom insurance policy from Lloyd’s or engaging in a bunch of interest rate swaps? Drawing a distinction between betting and insurance on those lines is the same thing as saying “being long in a stock is morally good, being short in a stock is morally bad”, and I don’t think that position holds up.
    - hattmall 2y ago
      In your scenario, you are using gambling as insurance, and that's different. If you bet $20 on the Greenfeet it's not because something bad happens to you if they win.
      - lucianbr 2y ago
        Isn't the fact that you cand use gambling as insurance and insurance as gambling support the idea that they are the same? If it all depends on the context, then it's not the activity that is different, but the context. To me it sounds like you're saying whenever you like it, you will call it insurance, and whenever you don't like it, you will call it gambling. "It" is not apriori anything, until you have decided what you want to call it. That makes it all the same thing, pretty much.
        csande17 2y ago

by pdonis 2y ago

BugsJustFindMe 2y ago

> But your next of kin only gets a payout if you die during the term. If you don't, nobody gets any payout and all the premiums you paid are lost. Yes, aka gambling. > But they are losing you That is true AND it is not what you paid for. Just like health insurance isn't paying for health but rather for coverage of bills related to loss of health. Being healthy is a win for health but not a win for buying health insurance. Being alive is a win for living but not a win for buying life insurance.

pdonis 2y ago
> That is true AND it is not what you paid for. You're qubbling. You paid for replacement of the income and goods and services you can no longer provide, in the event of your death. Sure, that doesn't replace you in the eyes of your beneficiaries (assuming we're not taking the extremely cynical viewpoint about that), but of course nothing can replace you in that sense. However, if your beneficiaries are financially secure enough that they do not need the insurance payout, i.e., if they're not depending on you for income or goods and services, then you should not be buying life insurance: you should be spending the premiums on something with a positive expected rate of financial return. The only reason to buy insurance in the first place is if your beneficaries are depending on you and will need something to replace you financially if you are no longer there.
- adw 2y ago
  No, the other poster is actually right. In betting on outcomes, there are two roles - bet (“long”) and lay (“short”). An insurance company is exactly a bookmaker; they are buying a bunch of risk and being paid a vig (or in the case of long-duration bets and life insurance, getting the carry) on each of those risks. This is indistinguishable from insurance, particularly when the beneficiary of insurance isn’t the subject (key-person insurance, for example, which you can view life insurance as a form of). You’re saying that because these are morally different - which I don’t actually believe, given that options trading is another equivalent form of hedging/speculation, but I will grant - these are different things. But “fire which I use to cook dinner” and “fire which I use to torch a car during a riot” are both fire; the goal is different, but the object used is not. Let’s say I hedge a bunch of political risk by betting on politics. How is that different from buying a custom insurance policy from Lloyd’s or engaging in a bunch of interest rate swaps? Drawing a distinction between betting and insurance on those lines is the same thing as saying “being long in a stock is morally good, being short in a stock is morally bad”, and I don’t think that position holds up.
  - hattmall 2y ago
    In your scenario, you are using gambling as insurance, and that's different. If you bet $20 on the Greenfeet it's not because something bad happens to you if they win.
    - lucianbr 2y ago
      Isn't the fact that you cand use gambling as insurance and insurance as gambling support the idea that they are the same? If it all depends on the context, then it's not the activity that is different, but the context. To me it sounds like you're saying whenever you like it, you will call it insurance, and whenever you don't like it, you will call it gambling. "It" is not apriori anything, until you have decided what you want to call it. That makes it all the same thing, pretty much.
      - csande17 2y ago