The Role of Insurance

Although it’s an odd way to look at it, insurance is a form of gambling. You spend money for the chance of winning more money or a prize. Like all gambling, the payoff depends on the bet (insurance premium amount), the odds (likelihood of the covered event occurring), and who you are betting against (an insurance company).

Typically, gambling is a single bet made for the possibility of a big payoff. By contrast, with insurance you are betting that something bad will happen — a major illness, a car accident, a house fire, or your death — and the payoff will help offset the costs of this event. The other differences are that you may have to be approved to make the bet, you need to keep making the bet in the form of regular insurance premiums, and you would prefer not to experience the event needed to get the payout.

When approaching the end of your life, the details of your health insurance become even more important to your health and financial well-being. In addition, there are ways that life insurance can help you before your death — especially if you plan ahead.