In the Kitces post, I very much like his "Principles of Insurance" section. I do risk management at w*rk, and the fundamental principle of 'each risk has an independent likelihood and consequence rating' is continually forgotten or muddled by the participants. I had that very conversation in a meeting yesterday. Risk is something we encounter, evaluate, and mitigate every day, but we don't usually decouple the likelihood and consequence when we consciously do so.
Insurance is about folks pooling their money to allow those who encounter the egregious 'undesired outcome' to weather it, and the others who do not to finance it. So, what you want to insure against are calamities that have a low probability of occurrence, but could deplete your assets if they occur. Auto accidents are such a risk.
The risk associated with LTC is a muddier proposition, as most have pointed out. A not-so-remote probability of eventually needing some kind of assisted living, but not so debilitating an outcome on assets. Thus, a lot of self-insurers, including me.
Insurance is about folks pooling their money to allow those who encounter the egregious 'undesired outcome' to weather it, and the others who do not to finance it. So, what you want to insure against are calamities that have a low probability of occurrence, but could deplete your assets if they occur. Auto accidents are such a risk.
The risk associated with LTC is a muddier proposition, as most have pointed out. A not-so-remote probability of eventually needing some kind of assisted living, but not so debilitating an outcome on assets. Thus, a lot of self-insurers, including me.