BE OPTIMISTIC BUT HAVE A PLAN B

Optimism vs reality

It’s great to be optimistic about your future. But you should also have a healthy dose of reality as well – which is where life insurance comes in.

 So why is it that when it comes to our health, safety or wellbeing we are unrealistically optimistic? Well, just like an umbrella comes in handy on a rainy day, so does insurance when things don’t quite go according to plan. This happened to a friend of mine after she failed to take out a health insurance policy. She thought that the premiums were far too expensive, she was confident her health was good and said it was an unnecessary cost. Unfortunately, later when she needed surgery, she lamented her decision not to take out cover.

We are naturally optimistic about our future

Harvard psychologist Professor Dan Gilbert demonstrates the reasoning behind this predicament. In an experiment, Gilbert gathered a group of participants and gave them all small magnets. Each magnet described various life events; yellow representing positive events and blue signifying negative events. The participants were then asked to use the magnets to describe past and expected future life events. They had to place them accordingly on the designated ‘past’ and ‘future’ wall.

The end result demonstrated that participants were more likely to attach the yellow magnets to the future wall rather than the blue ones, therefore, demonstrating that we naturally have a sense of optimism when viewing our future.

Insurance provides peace of mind

So how does this relate to life insurance exactly? Well, if you think about it, the vast majority of people believe that the likelihood of having an accident or encountering a serious illness is unrealistic or minimal at best. They subconsciously believe that insurance is an unnecessary cost or too expensive.

Unfortunately, with many people proving to have unhealthy diets, inadequate exercise regimes and escalating life-related illnesses, life insurance premiums are on the rise.

So how can you get the most out of your life insurance?

Look at your health

Smoking, high cholesterol levels and fast food are just some of the factors which are contributing to the rise in health insurance premiums. Understandingly, not all health concerns can be eliminated, but reviewing your overall health can certainly help minimise the cost of premiums both now and in the future.

Change your perspective of insurance

Look at insurance as a win-win situation; if you don’t claim it’s another fantastic year of good health. But if you do need to make a claim, the premium will most likely be a fraction of the payout you receive.

So rather than being blind sighted by optimism, take a moment to be realistic about your future. You should do your homework if you want your insurance to be cost effective. Shop around, compare policies, seek professional advice and make sure your insurer has all of your relevant details.

Milestone Financial provides advice regarding Life, TPD, Income Protection and Trauma insurance. We also recommend Credence Insurance for general insurance and business insurance.