So I agree 100% with 1 and 3, primarily because the profit margins on those insurances are huge, and the losses are so small.
Renters insurance and homeowners insurance on the other hand is quite inexpensive relative to what they cover, and the typical loss rates for insurers are a high percentage of premiums + float, what you are paying in premiums beyond your expected loss rate is very small but reduces the potential volatility of your wealth dramatically.
I guess it depends on what you mean by "rich", if you mean merely "financially independent" and not having wealth far beyond your lifestyle requirements, I'd still generally decide to carry home/renters/health insurance, and most wealthy people do. Note that these cover more than simply your stuff/home, they also have liability clauses that protect your from various claims including personal injury, which can be very expensive and have little or nothing to do with your residence. If you have wealth, it's actually a good idea to carry higher limit car insurance and a personal umbrella to protect your legal liability exposure.
I used to analyze insurance using a pure linear EV with catastrophic check. i.e. always better to self insure, as long as the worst case scenario isn't a financial catastrophe.
Now I think of it more like portfolio balance. It makes sense to do things which give up a little bit of expectation in order to reduce the overall volatility of your net worth. Having exposure to a huge risk like your home being destroyed and you having to rebuild it adds a lot of volatility. And you can insure against it for a very small amount relative to your exposure. Also note that the actual linear -EV from buying most common insurance is a relatively small percentage of the premium cost. For typical home/auto/life/health insurance, the expected loss rate is 80-90% of the premiums.
Compare to electronics insurance or travel insurance, or credit card life insurance, where you are typically paying 5-10 (sometimes 100) times the actual expected loss rate.
I'm not sure what you mean by cryonics insurance, but if you mean life insurance to fund a cryonics contract, I don't see how you can avoid it until you have enough assets to cover the cost. I can see possibly recommending term + aggressive savings over various kinds of permanent life insurance, but there are some significant tax advantages and creditor protections to permanent life insurance that may tip the scale.
Disclaimer: I am licensed to sell life and health insurance in MI and CT, but nothing said here should be construed as a particular recommendation of any kind of insurance -- everyone's individual needs are different.
Thanks for the insights. I am not in the industry. I hadn't thought about the tax and creditor aspects of life insurance. I can see how those could become murky really quick.
As for the cryogenics, yes I was thinking of some sort of life insurance policy. Maybe I should take it off my list since 'permanent death' would be financially devastating. My thinking was you probably have other things to focus on if you can't pay it out of pocket.
As for house and renter insurance, I don't think the insurance company's profit is a good indicator of how much expecte...
In American society, talking about money is a taboo. It is ok to talk about how much money someone else made when they sold their company, or how much money you would like to earn yearly if you got a raise, but in many different ways, talking about money is likely to trigger some embarrassment in the brain, and generate social discomfort. As one random example: no one dares suggest that bills should be paid according to wealth, for instance, instead people quietly assume that fair is each paying ~1/n, which of course completely fails utilitarian standards.
One more interesting thing people don't talk about, but would probably be useful to know, are money trigger action patterns. That would be a trigger action pattern that should trigger whenever you have more money than X, for varying Xs.
A trivial example is when should you stop caring about pennies, or quarters? When should you start taking cabs or Ubers everywhere? These are minor examples, but there are more interesting questions that would benefit from a money trigger action pattern.
An argument can be made for instance that one should invest in health insurance prior to cryonics, cryonics prior to painting a house and recommended charities before expensive soundsystems. But people never put numbers on those things.
When should you buy cryonics and life insurance for it? When you own $1,000? $10,000? $1,000,000? Yes of course those vary from person to person, currency to currency, environment, age group and family size. This is no reason to remain silent about them. Money is the unit of caring, but some people can care about many more things than others in virtue of having more money. Some things are worth caring about if and only if you have that many caring units to spare.
I'd like to see people talking about what one should care about after surpassing specific numeric thresholds of money, and that seems to be an extremely taboo topic. Seems that would be particularly revealing when someone who does not have a certain amount suggests a trigger action pattern and someone who does have that amount realizes that, indeed, they should purchase that thing. Some people would also calibrate better over whether they need more or less money, if they had thought about these thresholds beforehand.
Some suggested items for those who want to try numeric triggers: health insurance, cryonics, 10% donation to favorite cause, virtual assistant, personal assistant, car, house cleaner, masseuse, quitting your job, driver, boat, airplane, house, personal clinician, lawyer, body guard, etc...
...notice also that some of these are resource satisfiable, but some may not. It may always be more worth financing your anti-aging helper than your costume designer, so you'd hire the 10 millionth scientist to find out how to keep you young before considering hiring someone to design clothes specifically for you, perhaps because you don't like unique clothes. This is my feeling about boats, it feels like there are always other things that can be done with money that precede having a boat, though outside view is that a lot of people who own a lot of money buy boats.