Where you win all the time

Question: Is there a game of chance where you win all the time? —asked at “Ask a friend, ask Efren” free service available at www.personalfinance.ph, Facebook and SMS.

Answer: It is but human nature to fight for survival. It has been the rule since the dawn of civilization. Therefore, it is natural for humans to avoid pain and suffering, if not minimize them because of the risk that they may lead to death.

Borne out of this drive to survive is also the desire for immortality, not just after death but physical immortality. Rulers of old had made attempts at physical immortality. And man, so far, has learned his lesson that life on earth does have limits.

So, instead of physical immortality, man at least wishes to live a long and healthy life. In fact, he believes that he will do so, especially while he is still young and robust. And this is the exact reason why the majority of people, at least in the Philippines, do not like buying life insurance; people simply find it difficult to imagine being called early from this life.

On the other hand, people are easily attracted to games of chance where the prizes are big. Case in point, the lotto and other forms of gambling. In such games, the default behavior is to focus on the prize and not the chance of winning. With the 6-58 ultra lotto game for example, the reason why the prize money hit over P1 billion is that the chance of winning is one in over 40 million or 0.0000025 percent. The prize money is just too blinding, hence people kept on betting and bringing up the prize money further.

But believe you me, life insurance is a necessity simply because we have no control over our future.

So, here’s one way to persuade yourself how to appreciate and buy life insurance. When you buy an investment, you are making a bet that the investment will make money for you. But when you buy a life insurance policy, it is not you who is making a bet. It is the life insurance company that is making a bet on you.

Now, what kind of bet? The life insurance company is one with you in betting that you will not die young. They need to do that because they also need time to grow your premiums in order to pay your loved ones the much larger coverage amounts. In other words, just like you, life insurance companies are hoping that you will not be taken from this life early.

Of course, the next question will be, “Then why buy life insurance?” Since we do not control our future, the life insurance company stands ready to pay the coverage proceeds to your loved ones should fate turn against you.

But why is life insurance a sure bet? Because history has proven that there is a 100-percent probability that you will leave this world eventually. And when you do, your life insurance policy will be there to still pay out the proceeds of your policy to your loved ones. Life insurance is coverage for a sure thing.

And because your premiums (in nonterm policies) are never thrown away, these premiums remain as assets in your household balance sheet.

All told, life insurance is an asset that is a sure bet.