Many of my clients who often compared life insurance purchase to gambling. Their rationale is that by paying premiums to cover an insured event, we are betting against the insurance company. Since insurance is an expense and one effectively loses the “bet” if the insured event such as death, disability or critical illness does not befall upon us. It seems to have the same effect of placing a bet on a table game in a casino and hoping for a favourable outcome.
So is insurance truly like gambling? Let us tackle this question from a risk management perspective. We understand that when it comes to risk financing, there are two options:
1) Risk Acceptance (Not buying Insurance)
2) Risk Transfer (Buying Insurance)
Let’s explore the 2 options in detail.
Financially, there are 3 possible scenarios that can happen to an individual who chooses not to buy life ...
