If you are thinking about buying life and/or health insurance OR you are justifying why you should not pay money for this type of insurance, then this is worth a read˳ Here, we will look at insurance like a gamble or a bet: there is a cost, and there is a winning scenario and a losing one˳ How much could you win and how much could you lose?
Before we get into the 4 possible outcomes from either buying or not buying insurance, let us set the stage˳ Imagine you are in a casino, sitting at a table, gambling˳ You can either bet into the pot, or keep your money close˳ Here is the twist; if you bet and the cards are a winner you get to keep all the money you have and maybe add some cash to the pile˳ If you do not bet and you lose, you lose everything you have˳ The bet is small, and your pile of cash in front of you is big˳
Unfortunately, in this game if you win, you have become disabled, gotten a critical illness or died prematurely˳ Not a very good winning hand, but all you assets/wealth is protected for you and/or your family˳ If you lose, you still get sick, hurt or die, but the life savings you have built up can all disappear, leaving your family or you with nothing˳ There is a big chance each year that nothing happens (a pass), and you have to decide if you will bet again next year or not˳
Now, let us talk about the odds˳ Here are the chances each year of you either dying, getting injured or sick and ca not work, or getting a critical illness before age 65 (these numbers are the percentage chance each year until age 65):
Chance of dying in any given year: 0˳15% chance
Chance of having a critical illness in any given year: 0˳5% chance
Chance of becoming disabled for the long term in any given year: 1˳06%
If these odds seem low its because this is the risk each year, and cumulatively it builds˳ Total risk to age 65 of one of these events happening to you is 10% chance of dying, 33% chance of getting a critical illness and 50% chance of becoming disabled during your working years˳
So, knowing the odds, would you place a bet or not? Here are the 4 possible outcomes˳
1˳ You Buy Insurance, and Something Happens
If you buy life, disability and/or critical illness insurance and one of these events actually happens to you, you are protected˳ For the relatively small amount of premium spent you or your family will receive a huge amount of tax free cash to protect their lifestyle, replace lost income and pay off debts like your mortgage˳ The cost of the insurance should be in the range of 1-2% of your family income each year to protect you from all risks˳ You Win Everything!
2˳ You Buy Insurance, and Nothing Happens
If you spend the money on life, disability and/or critical illness insurance and nothing ever happened to you before age 65, you can consider yourself one of the lucky ones˳ So, what did you lose by spending your hard earned money on insurance premiums? Let us assume you spent $1,000 per year for 35 years on life and health insurance˳ That would be $35,000 of premiums gone to insurance companies to provide protection that in hind-sight you did not need˳ This is less than one years income˳ This is only a fraction of the total income you made over those 35 years˳ This amount of money will not devastate you financially: it is a manageable expense˳ You Lose A Small Amount!
3˳ You Do Not Buy Insurance, and Nothing Happens
In this case, you have decided to not buy the insurance and again you are lucky: nothing happens through to age 65 when you retire˳ Since you have not spent any money on life or health insurance, you were able to invest that money or put a little more towards your family lifestyle spending: go on one more vacation every 3 years or something like that˳ You Win A Small Amount!
4˳ You Do Not Buy Insurance, and Something Happens
In this case you have bet on nothing happening during your lifetime, and you are wrong˳ Either you got sick, hurt or died prematurely, and you and/or your family is left without financial protection˳ All your savings could be depleted in a matter of months˳ The high cost of supplementary health care not covered by the Alberta Health Insurance Plan can add up quickly˳ Or, for instance, you died and your mortgage ca not be paid and there is no more income for your spouse and children to live on˳ In this case, You Lose Everything!
Those are the chances, costs and possible outcomes of buying or not buying life and health insurance protection˳ These risks are real, and no one is immune˳ People are either the lucky ones who get through their working life without any major life or health events, and there are the unlucky ones˳ If you happened to be among the unlucky group, having insurance protection would be great˳ Unfortunately, we do not know what the future holds, and you have to buy insurance while you are still healthy (insurance companies will not insure a risk once it has occurred)˳
Source by https://ezinearticles˳com/?The-Insurance-Gamble—4-Possible-Win-Lose-Outcomes&id=5080672
