"What is a chance of you seeing a dinosaur when you walk out of your house?"
"I’ll either see it or not…"
Insurance is essentially gambling for risk-averse people. Just like a casino, it’s set up so that the house always wins a predetermined percentage. And in both scenarios buyers are trading virtually certain small loss for a small probability of a big benefit. Both industries have been flourishing and profitable for ages, illustrating how people tend to both exaggerate small probabilities but underestimate small certain costs. We are afraid of a microscopic chance of dying in a plane crash but absolutely comfortable with almost certain shortening of life via poor nutrition, activity, stress or sleep habits.
It’s useful to keep this in mind for marketing and product strategy. When consumers believe that there is a 1 in 100 chance that they will need some product or service, they act as if the chance is 1 in 10 or even higher (numbers are just for illustration - would be different for each product). At the same time, if the cost of having an option to use this product or service is small enough, consumers act as if it’s even smaller. Some very successful subscription businesses are built based on this phenomenon.