The No-insurance Policy

This is one of a series of blogs aimed at raising awareness of the everyday external reality we take for granted (the matrix) and then considering how well it really works for our collective well-being, both short and long-term.  This week the lens is focussed on Insurance. 

The insurance industry is a licence to print money!  Simply locate a general area of psychological insecurity, collect statistical data on it and employ a number-cruncher to calculate the odds, then employ a bunch of high-charge, commission-based sales people and promise customers that you’ll make that area of concern secure for them.  Now in principle I don’t have problem with that – every business would like to operate in such a risk free environment, and is entitled to strive for that.

But I wonder how many of us really appreciate why we’re buying these products.  Of course at one level it’s to allay our fears of misfortune and help us cope with feelings of insecurity.  But fears of misfortune and feelings of insecurity are for the most part internal experiences that will not be soothed for long by a piece of paper promising to turn any misfortune into a cash benefit.  If we were more aware of the real transaction that we were entering, then we might choose more wisely – but we generally don’t understand the odds we’re dealing with.

For instance Life Insurance, or if you remove the spin, “Death Insurance” is probably the shining example.  Typically, people take out a Life Insurance policy out of a desire to provide security for their family.  The first two years of payments go in commission to the salesperson who sold you the policy; the next two years of payments go to the insurance company to cover their overheads; and the next two years of payments are straight out profit.  After six years the majority of people quit paying and cancel the policy, realising just how much it’s going to cost them over a lifetime, and probably feeling more secure within themselves after surviving well for that six years.  The number of policies that end with a death cheque is less than 2%. Go figure!  (These stats are about 10 years old now, but I doubt that much has changed in that period.) 

Probably the most “matrix-embedded” insurance is Heath Insurance, or if your remove the spin, “Sickness Insurance”.  Firstly note the spin, such that we don’t even query the misnomer any more.  If we insure against flood, it’s called “flood insurance” – against fire, it’s called “fire insurance” – against a personal or motor car accident, it’s called “accident insurance” – but against sickness, it’s called “health insurance”!  (As my good friend Dilbert notes, “The purpose of marketing is to prevent customers from realising what they’re buying”.)  But I digress…

Health Insurance isn’t actually insurance at all.  For a start there are only two categories – ‘single’ and ‘family’ so there’s no scale of risk involved.  Whether you take personal responsibility for your health and fitness or not, the rates are the same.  So let’s examine the odds.  In Australia some 40% of total health care expenses are spent on preserving the last couple of years of life.  Interestingly however, an aging population does not increase total heath care costs (we are staying healthier and living longer and then dying more quickly as many of our bodily systems now shut down at the same time).  From another angle, 5% of the population consume 49% of all health care expenditure, whether insured or not.  Are you in the 5% with chronic serious illness or in the last couple of years of your life?  Health Insurance is in reality a scheme in which the healthy are going to pay for the sick. 

So if you are in the 95%, reasonably healthy category, then (apart from government imposed penalties) surely only a deficit need for security would drive you to take out private health insurance! 

Now it may be fair enough that the healthy should pay for the sick – but let’s state that openly and address it honestly.  Better models of health care could be developed – ones that reward health and fitness rather than penalising it, but that is not the point here.  The point here is that deficit needs (as opposed to genuine needs) cause us to support the matrix that both plays on them and reinforces them in order to maintain a status quo of vested interests.

When I first stood on my own as an independent consultant 30 years ago, it was scary having no regular income, no paid sick leave, no public holidays, no annual leave, no company car, no worker’s compensation, no superannuation etc.  So I thought it would be a good idea to take out income insurance – and I did take it out for a few months, before I realised that my real motive in doing that had been to try to off-load some of the responsibility for my own life and well-being.  I realised that the motive and the policy were, in themselves, demeaning to one’s character and not in keeping with healthy personal development.

So look at what insurance you carry – and more importantly a little deeper to the real reason why you carry it.

Life is risk – you’re not going to get out of it alive!  Do you try to avoid the risk in living fully – and along with it, the risk of growing fully?  My only policy is “Comprehensive Life” – and it’s not with any insurance company!


What's yours?