Some people find it hard to stop playing the lottery because they're worried that the very day they stop will be the day their lucky numbers are drawn, and they will tragically lose out on millions and millions of dollars.
DNPTL insurance saves you from this tragedy. You register your 6 lucky numbers with the company and tell it what games to follow, and, from then on, if those numbers are ever worth a jackpot, the insurance company will pay you that jackpot in full -- even if you also played and won the jackpot on your own!
But, the insurance company doesn't pay any 2nd or lesser prizes. It is only catastrophe insurance, in case you accidentally hit the jackpot.
Because of this, DNPTL is *not* the same as a lottery subscription or other automated lottery idea.
From the insurance company's perspective, this coverage is a lot like life insurance. There is a very high payout but it has very small chances of occurring in any given year. Due to the volatility of cashflows involved, only life insurance companies with high levels of surplus could offer this product.
But, because of the infinitessimal odds involved, insurance companies could offer this coverage for just pennies a week, and the fact that the odds are precisely known would make designing and pricing this product a snap.-- phundug, Jul 06 2004 ...and because prizes below the jackpot aren't included, the insurance company can charge less than the price of a lottery ticket for insurance on a weekly draw and still make money.-- hippo, Jul 06 2004 //But, because of the infinitessimal odds involved, insurance companies could offer this coverage for just pennies a week,//
Actually, it would have to cost quite a bit more per week. Otherwise everybody would just get DNPTL insurance. Most lottery people are expecting to get the big prize. If they could get the chance at the big prize for pennies per week instead of dollars per week, everyone would buy the insurance. And then the governent that makes *VERY* large amounts of money on the "bad-math tax" will get *VERY* upset with you.-- GenYus, Jul 06 2004 I guess the government would have to respond by creating a jackpot-only form of lottery for cheaper than the regular type. This would obviate the need for DTNLP insurance. Dang.-- phundug, Jul 06 2004 But isn't DTNLP insurance just another form of the lottery anyway? When you boil it down: Here are my lucky numbers, and here's some money - if I win, pay me a lot more money.-- Worldgineer, Jul 06 2004 Yes: it is just that. It is "segmenting" the lottery into new securities made up of just parts of its cashflows.
It would be popular -- just look what brokers are doing in the stock market. You can split a bond into a short maturity instrument, a medium-maturity instrument, and a long-maturity instrument by breaking its payments up and giving them to different people. There is an added "transaction fee" for this manipulation. But asset/liability managers buy the split up bonds anyway because they need something to counteract the costs they will incur exactly 6 years from now.
Some people would willingly pay the insurance company's risk/profit charges for the ability at a cheap jackpot-only form of lottery. But alas, GenYus is right: the gov't would never allow it.-- phundug, Jul 06 2004 I'm f*g awestruck by this bomb of an idea.-- dpsyplc, Jul 06 2004 Good idea but the insurance companies would need to get a lottery license from the government in order to operate it. I very much doubt that they would grant one.-- DrBob, Jul 07 2004 It does nicely blur the line between gambling and insurance. What if instead of insuring against not playing the lottery you insure agaist not buying a given company's stock?-- Worldgineer, Jul 07 2004 I think this is a brilliant idea.-- britboy, Jul 07 2004 [Worldengineer], you can already insure not buying a company's stock - buy purchasing an option on that company's stock. You can even sell the option on to other people if you want...
[phundug]It all depends on the price - If you can get 3 sets of DNPTL numbers for the same price as actually buying a ticket - you might as well not bother buying a ticket.
Assuming people play the lottery to win big, this idea would just undercut the lottery people and drive them into recievership.
Which may not be a bad thing...-- zen_tom, Jul 07 2004 Since it is a psychological comfort-blanket, would it be a good idea to offer a sort of fade-out?The proportion of the lottery win you would receive should over time be reduced.
So the first week you've stopped you'd get nearly all (if it won), the next week slightly less, and so on until you'd weaned yourself off the habit and could quit.
Incidentally, depending on the lottery type,the odds arn't quite so straightforward. In the UK lottery, for example, people pick their own numbers. Since people who play the lottery are stupid, many of them pick low numbers. This means that if their numbers come up they are likely to share the prize with a larger number of other people, and therefore win less. In addition, if the big prize isn't won it goes on to the next week.
Therefore you can only calculate the insurance price if you know the numbers of a representative sample. People with a lot of high 'lucky' numbers would have to pay more for their lottery insurance.
A small lottery-insurance organisation could of course insure itself against excess payout with a larger one.-- Loris, Jul 07 2004 could be good for syndicates. where the potential for a problem is greater.-- engineer1, Jul 07 2004 The syndicates should drop out when they reach break-even, or when pots never get to $60 million (assuming this idea guarantees $60 million dollar pots would have to accumulate by rolling over longer and longer as fewer players vie), or if syndicates are quick to sieze upon this method of industrial lottery.-- dpsyplc, Jul 07 2004 //It does nicely blur the line between gambling and insurance. What if instead of insuring against not playing the lottery you insure agaist not buying a given company's stock?//
There's a line between these?-- ye_river_xiv, Feb 13 2010 While the odds are precisely known, the payouts for most lotteries still change. Even if the odds of winning are a fixed ten million to one, if the jackpot has risen to $20 million, a $1 ticket becomes a pretty good investment. In those rare circumstances, the very high payout can't be recovered by premiums that cost less than the price of a ticket. So unless the insurance scheme is to collapse whenever there extremely large jackpot, pricing would have to take the estimated jackpot into account.-- SirBobofBobton, Feb 15 2010 I suppose the best ego insurance is not to play the same numbers every time.-- rcarty, Feb 15 2010 If it comes with a visit to the company psychologist, who would discuss the whole lottery thing showing the person how its illogical using Hofstadter's proof, then the insurance company could say that its only a way of helping the person get off his gambling habit, and they wouldn't need the license.
Also limit it to a once a year and three times in a lifetime.-- pashute, Jul 24 2011 random, halfbakery