Finance Tools
Is Insurance Worth It Calculator
Estimate whether an insurance plan is worth it by comparing expected annual costs with and without insurance based on premiums, risk, and potential losses.
How to use this is insurance worth it calculator
- Enter the annual insurance premium.
- Enter the deductible.
- Enter the probability of a loss event.
- Enter the expected loss amount.
- Compare expected annual cost with insurance vs without insurance.
Example
If premium is $1,200/year, deductible is $500, probability of loss is 10%, and expected loss is $10,000:
- With insurance expected cost = $1,200 + (0.10 × $500) = $1,250
- Without insurance expected cost = 0.10 × $10,000 = $1,000
- Expected value suggests insurance may not be worth it, but risk protection can still matter
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