There is such a thing as a happy loser!
Imagine yourself at the races. You study the field, choose your horse and then place your bet. And then you hope that your horse run stone cold last!
Sound crazy? Well, if you’re betting on horses, it is. But there are other kinds of ‘bet’ where this is exactly what you want to happen. Those bets are also known as ‘life insurance.’
Some people call life insurance a ‘grudge purchase.’ That is, nobody likes paying for something that they hope they never use. It is like paying for a bet that you want to lose. That is absolutely the wrong way to think about things. Insurance is like backing a horse in a horse race and knowing that the best possible outcome would be if your horse ran last. That makes it the kind of bet that you cannot really lose. Which is exactly the right way to think about insurance.
When you take out a life insurance policy, you’re hoping never to make a claim. You’re hoping that you’ll get to the end of your life and the amounts that you spent on premiums have been unnecessary. If that’s the case, this is wonderful news – you stayed alive and you never got sick and you happily banked your entire working life’s earnings. These earnings are substantial: a person earning average wages across a 40 year career will bank about $3.3 million, including superannuation.
So, lose your bet and you end up with $3.3 million. How good is that?
But if you don’t lose your ‘bet,’ and you do get sick or die, then life insurance means you still win – at least financially. You get back more from the insurer than you paid in premiums. You and your loved ones do not suffer financially even while you suffer physically.
That’s why insurance should never be a ‘grudge purchase.’ It is actually one of the few things in life the present a genuine ‘cannot fail’ situation. You win if you need to make a claim – and you win even bigger if you don’t need to make a claim.
Imagine how much more fun you would have at the races if you win more by backing the slowest horse. Imagine how much more relaxed life becomes when losing makes you happier than winning!