Because even though I can afford to buy/repair a new phone if I break mine; it still _feels_ terrible to have to spend 500+ bucks because I was a dumbass.

I literally toss my phone to my couch or my bed from across the room dozens of times a week without worrying about misjudging the throw (which happens more than I’d like to admit), toss is on the ground at the gym, have no problems taking long baths with it, washing it under the sink if it gets dirty, and do dozens of things I would not do if I had to pay a full price if I ended up actually breaking it.

Having AC+, lets me treat the device with the level of carelessness that is worth the price to me.

Math-wise with how durable recent flagship devices are, you are probably correct that I’d be better off financially to just accept that I will break a phone every couple of years and just eat the cost.

But psychologically, I’m happier paying ~120bucks a year, than $500 in repair fees once in a while.

Yes, the argument is that the entity providing the insurance is surely earning more income that they are paying out since in addition to payouts, they also have overhead costs and must be profitable. Said another way, their customers are paying more than they receive, on average. That's a mathematical and economical certainty.

You are right that it might still feel better to you to pay regularly instead. That's subjective.

Knowing that you will likely end up paying less in the long term if you don't pay the insurance might help getting over that feeling, but that's a personal choice in the end.