There’s still time to get Apple Care on that new iPhone.
Those were the associate’s words, as he handed the man across the table from me his new iPhone.
But the associate wasn’t finished.
We now have monthly or yearly plans. You can add it for as long as you own the phone, unlike those old two-year Apple Care plans. And if you break your phone, you’ll be covered.
The customer was unmoved.
If my phone gets messed up, he said. I’ll just buy a new one.
The associate looked perplexed.
You’d rather pay another $800 on a new device, than $30 on a screen repair? The math doesn’t add up.
It didn’t add up to me either. After the iPhone owner left the store, I told the associate that I would have gotten the new Apple Care plan.
And yet, as I left the store, I started to doubt my certainty.
After all, I’d made some travel arrangements the night before. Airline tickets, rental cars, hotel reservations — the whole deal.
Each of those purchases came with an option to buy insurance for cancellations, delays, and other mishaps. And in each case, I’d declined that coverage.
I was no better than the guy with the brand-new iPhone. Risk did not factor in.
There’s an infamous scene in the sitcom Family Guy that sticks with me.
The dim-witted protagonist — Peter Griffin — opens his front door and encounters a salesman hawking volcano insurance. Even though he lives far from any volcanic zones, Griffin uses his wife’s rainy-day fund to pay for the coverage.
Predictably, this ends up landing the Griffin family in financial ruin.
I think many of us look at insurance this way. We see it as a scam — one that leeches our hard-earned money in pursuit of bad outcomes.
We don’t want to think that we’ll get in a car wreck, or break our smartphone, or get food poisoning and miss our flight. And we definitely don’t want to throw money at those possibilities ahead of time.
We’d rather delude ourselves into a false sense of security, floating down a river of cost efficiency and good vibes.
I, more than anyone, know how ridiculous this is.
I’ve worked in the insurance technology space for more than a decade. I’ve seen the data. I’ve learned the nuances of coverage. And I know that the overall system — while imperfect — is far from a scam.
Plus, I’ve seen the benefits of insurance in my own life. Car insurance helped make me whole after a Dodge Ram smashed into one of the doors of my SUV. And event insurance reimbursed my entry fees when I had to drop out of the New York City Marathon due to injury.
Yet, I still find myself declining event insurance these days. And I still tend to favor cost efficiency over broad coverage when it comes to my car insurance policy.
The risk is there. The logic is not.
I don’t know much about the man who walked out of that store with a new iPhone.
But I would imagine he holds a few stocks and bonds. And if he were to find himself in Las Vegas, he’d likely take a turn at the slot machines.
This is not typecasting. It’s oddsmaking.
You see, there’s been a surge in recreational investors this decade – particularly in the wake of the pandemic. And Vegas casinos have always been popular with young adults.
I’d be hard pressed to imagine Mr. I Don’t Need Apple Care bucking those trends. Despite his insurance frugality, he seems to be in the peak audience for them.
Investing and gambling share common traits. Particularly the dopamine high of making a windfall, and the delusion that such happy outcomes will befall us frequently.
That’s what draws people in. That’s what keeps people at the table. And that’s what leads people to believe that risk is negligible.
This couldn’t be further from the truth.
Risk is multiplied in the each of these forums, in great part because control is out of our hands.
We don’t get to run the companies we invest in. And gambling is nothing more than a game of chance.
It’s likely that we’ll lose at least some of what we put in. And it’s unlikely we’ll be compensated for that loss.
Insurance might not be popular. But it turns out to be much more practical than the cool activities.
If only we’d come to our senses.
A great many historical figures are known for only one thing.
Sigmund Freud is not one of them.
The father of modern psychoanalysis helped people around the world discover their unconscious, unveiled the Oedipus complex, and redefined sexuality. And along the way, he introduced us to The Pleasure Principle.
The Pleasure Principle is an instinctive drive to seek pleasure and avoid pain. It guides us as we work to satisfy our biological and psychological needs. And it might explain our twisted view of risk.
You see, The Pleasure Principle aims to insulate us fully from bad outcomes. But in a world that’s often random and cruel, that mandate is in impossibility. Risk is always lurking, like a shadow. And pain is never far behind.
Our brains can’t square with this reality. After all, we can only keep our guard up so long before we wear ourselves out.
So, we let the The Pleasure Principle cast a spell of delusion. We get addicted to the prospect of winning while turning our backs on the mere mention of losing.
This dynamic is what draws us to invest, to place bets, and to chase dreams with vigor. And it’s also what leads us to get repulsed by mentions of warranties and insurance policies.
Simply put, we’d rather wish away the bad outcomes than have a plan for mitigating them.
Such thinking is foolhardy. But it’s a Freudian principle. It’s darn near inevitable.
That is, unless we lean into the skid.
Yes, it we play Jedi Mind Tricks on ourselves, we just might cajole ourselves back to our senses.
That means treating insurance like an investment, rather than a nuisance. It means expecting the worst, rather than the best. And it means treating positive outcomes as a happy surprise.
Such a shift requires some emotional jiu jitsu, and a fair dose of pessimism. But hedging our bets in this way, can help keep us from losing it all. It can keep us from losing it all.
That seems like a winning strategy to me. Let’s make it a reality.