# Paying for insurance reduces financial bias People pay for insurance so that they are not surprised by unplanned, significant expenses. In other words, they **==reduce their financial bias==**, *ie* the difference between predicted and actual expenses. It is, basically, a [bias-variance tradeoff](https://en.wikipedia.org/wiki/Bias%E2%80%93variance_tradeoff): you increase the variance of your prediction model (how much predictions vary for a given data point) in order to decrease its bias. This produces a more complex model that is less likely to underfit your expenses. --- ## 📚 References - [Bias Variance Tradeoff](https://mlu-explain.github.io/bias-variance/)