Cost of NOT insuring
Understand why the expected value calculation: if a 2,000,000 in local currency medical event has a 5% annual probability, expected annual cost = 100,000.
In this lesson
Cost of NOT insuring is part of Insurance and Risk Protection. This preview shows how financial-independence connects to everyday family decisions such as earning, saving, spending choices, goals, approvals, or parent-guided money conversations inside Progress Penguin.
Today’s money mission
Imagine this situation: You skip health insurance at 80000 in local currency/year for 5 years (400000 in local currency saved). In year 6, you have a medical emergency costing 2000000 in local currency.
What you need to know
The expected value calculation: if a 2,000,000 in local currency medical event has a 5% annual probability, expected annual cost = 100,000. Insurance at 80,000 in local currency/year costs less than the expected loss — and removes all uncertainty. Even if the event never occurs, you bought rational protection against a real risk. The 'wasted' premiums bought genuine risk reduction.
Real-life example
Real-life money moment: Design a minimum insurance portfolio for a 19-year-old local starting their first job, earning 150000 in local currency/month, with aging parents who depend partially on their income. — Minimum coverage rationale: health insurance (critical — one hospitalisation could cost more than a year's savings). Life insurance (necessary — parents depend on your income; term life at 19 is very cheap). Emergency fund (the self-insurance layer for smaller risks). Total 10,000 in local currency/month is manageable at 150,000 in local currency income. Without it: one major health or life event devastates both you and your parents financially.
Progress Penguin connection
In Progress Penguin, complete or review one practical action connected to “Cost of NOT insuring.” Use this lesson objective: Understand the key principle behind cost of not insuring. Record what you checked, the evidence you used, and your next step.
Activity preview
Choose the best money move
Use what you just learned. Choose the option you can explain.
Quiz preview
The real cost of skipping insurance is:
You skip health insurance at 80000 in local currency/year for 5 years (400000 in local currency saved). In year 6, you have a medical emergency costing 2000000 in local currency. Net outcome?