OK, if you're pedantic, call it a "mutual fund, mashed together with insurance and other financial products". But the fact that multiple products are sold to you in a tied package says nothing about the insurance component of the business. Even the fact that insurance companies try to invest the "float" etc. to maximize their income says nothing about the insurance component of the business.
Don't worry, in the next scene, our heroes find a doctor in the back, along with a jive lady, and another pilot with a drinking problem.
That's OK too. Shrink 'em down to the constitutional essentials.
Fishing for an Ig Nobel Prize perhaps, good luck!
"Ok, I apologize profusely."
"I thought you had some idea what you are talking about."
You were right.
You're using "expected" in a uselessly fuzzy and different way throughout, confusing "hoping" or "worrying about" and "average". The mathematical way, the quantitative way, is related to probability & money, and that is the language of business. You're also using "value" in a uselessly fuzzy and different way throughout, confusing dollars and feelings of enjoyment.
"But as you despised all subjective looks,"
Stop putting words in my mouth.
Do you have a succinct proposition you'd like to discuss?
"But as you despised all subjective looks"
I did no such thing. I simply pointed out that transactions ultimately occur in terms of dollars, so the participants have to translate their subjective values to objective quantities at some point.
"It only makes sense to buy a financial product when either you get back more money than you paid,"
Really. Do explain lotteries, or equity options, or numerous other financial products without a guaranteed positive return.
Similarly, in the case of insurance, if a covered peril occurs, you probably would likely get back more money than you personally paid. That changes nothing about the averages for a competently run run risk pool.
In every single dollar they pay (on average more) as premiums and receive (on average less) in benefits.
I'm sorry, are you putting me on? Would you seriously ask "where is nice objective dollars" in "having a good meal" or "wearing a comfy pair of shoes"?
Context, please, context. The quoted words were referring to your way of explaining how much more valuable money is to a sufferer. That way of looking at the problem is not worth much: it is qualitative, subjective, and vague.
But that's ok, people can value things in qualitative, subjective, and vague ways, as long as at the end of they day, they transact in nice objective dollars.
I'm sorry, I don't know what you're trying to say. I already belaboured the obvious and the inobvious.
"why does it make sense to buy insurance when it necessarily involves a statistical certainty of economic loss"
This is kind of elementary. Most people rest easier, knowing that in the case of a problem, they will have $X with near-100% probability, rather than $savings with questionable probability. That comfort is worth the statistical overpayment.
"And why would you overpay for avoiding catastrophic loss?"
If you mean "overpay" in the sense of pay slightly more in premiums than your risk (probability of peril * cost of peril), then you do that because you must: no insurance company would willingly offer you a deal on which it is expecting to lose (on average).
On average, aggregated across the homogeneous risk pool, indeed every participant loses. But that's OK - the point of insurance is not to win on average. It's to avoid catastrophic loss in an unlikely situation - if you win a bad-news lottery.
An economical insurance scheme will cost participants a little net loss on average. An obamacare-distorted "insurance" will cost many participants a big net loss on average, and give many other participants a big net gain on average. On purpose, as a welfare cause.
"Without this subjective look, it is always foolish to get insurance (unless mandated by law, of course) . Is that your statement?"
Of course not. You introduced the concept of insurance benefit payment dollars being worth more than a dollar each. That might make emotional sense for a moment to a sufferer, but makes no economic sense at all.
"you buy plan A and I buy plan B, does not mean that my money will never go to you and your money will never go to me"
That's just incidental intermingling at the level of administration, not at the level of actuarial cost / benefit. If an insurance company were to host multiple plans, and puts in a fix into plan A to be slightly unprofitable but plan B to be slightly more profitable, the suckers in B would go to a competitor.
"That means [as an insurance company, you] WANT healthy people to pay into the system explicitly so their contributions can offset the costs of the sick people making claims against their policies."
Of course, But this desire is limited by competitive pressure, wherein another insurance company who's not trying to screw the claim-free customers can charge them less (in a risk pool dedicated to people like themselves). Guess what has just been outlawed...