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by francescopnpn 2164 days ago
How much does the insurance cost? Was it hard to find someone wiling to insure that?

Finally, you pay 0.2% but Ally pays 1% yet you say your rates are as good.

2 comments

On the interest rate side, the 0.20% is the base rate. If you win no prizes, you get that. Prizes comprise the bulk of the value from Yotta. Your total return is prizes + the base rate.

On the insurance side, there are specialty insurance companies that do this kind of thing, similar to hole in one prizes or half court shot prizes at sporting events.

We pay them a mark-up on expected value. Since the risk they're taking is purely mathematical random chance, it's pretty much the best type of insurance for someone to underwrite. There is no uncertainty about what the risk is to them, unlike most other insurance where people are using actuaries to estimate what the risk is, but it's not actually known for sure.

Why bother insuring yourselves then? Just to cover yourselves incase you get "unlucky"?

Couldn't you structure the contest so that you know you'd payout $X per week and not need insurance?

I guess people eventually could win twice in a short span if they're unlucky and they'd be out of money
Even if somebody won the jackpot only once, I assume they'd be out of money by far, which is why insurance is needed.
The 0.2% is the base (minimum) rate, not the average rate.