Life insurance has been described by some as gambling. But the definition of gambling is to bet on an uncertain outcome, and there is nothing uncertain about the outcome of life. The uncertainty, of course comes from the “when” and not the “if,” for as John Maynard Keynes so eloquently put it, “In the long run we’re all dead.”
Betting on an uncertain outcome and preparing for one are not the same. For example, if you carry a spare tire in your trunk (who doesn’t?) are you betting that you’ll get a flat tire? Of course not, but since getting a flat is certainly a possibility, it makes sense to prepare for that contingency.
Well dying is also a possibility, regardless of one’s age. Of course the odds increase as we get older, but just yesterday (Sunday, May 14th) a 28 year-old Passaic man was struck and killed by lightning while at a Mother’s Day barbeque. So how does it make sense to prepare for the possibility of a flat tire and not for the possibility of a premature death?
I know there are some religious sects that don’t buy insurance because it is against their beliefs, but my extremely limited research reveals that is more because of their belief in self-reliance rather than feeling that insurance represents a form of gambling.
“Life insurance is gambling” has always felt to me as more of an excuse than of a belief. The extent to which people will go, and the excuses they will come up with to not purchase life insurance is truly mind-boggling.
The reality is, the risk is present, whether or not it is insured. The article didn’t say if the gentleman struck by lightning had life insurance, but the incident illustrates the fact that the risk is always present.
I still carry in my briefcase an obituary from 1991 for the President-Elect of the National Association of State Boards of Accountancy who was killed by an automobile while crossing a street. The reason I carry it is not because of the random nature of his death because there are numerous examples of those.
The reason I carry it is because this gentleman was the managing partner of a (then) Big Eight accounting firm’s office, and yet his obituary stated that a fund had been established to assist in the education of his children, a tell-tale sign that he had an insufficient amount of life insurance.
Why he had an insufficient amount is unknown to me, but whatever the reason, I’m sure it sounded ridiculous to his widow and children. The risk was present, and his decision to ignore it didn’t alter it one iota.
So is life insurance a form of gambling? To me, it seems that not having it is gambling. We are all going to die, it’s just a matter of who is left holding the bag, the insurance company or the heirs.