Using Odds to Make Better Decisions

Winning a lottery

The odds of winning Powerball in the United States are about 273 million to one against. The odds of winning LottoMax in Canada are about 28 million to one against. The odds of being killed by a shark are about 11 million to one against.The odds of being struck by lightning within one year is about 700,000 to one against.

We carefully avoid the ocean if the shark flag is up on the beach, but buy lottery tickets.

People buy tickets despite the odds, because they can see what they would do with the money. Help friends and family. Buy things they would enjoy. Have security forever. That’s the plan. Results are a little uneven on the successful outcomes.

The idea is you give up a little each month for the chance of a big check.

Life insurance.

If you don’t buy life insurance, it is just the opposite. It is like an anti-lottery. You save a little each month and don’t get the big check under any conditions. The odds of a healthy male non-smoker aged 25 dying in the next 10 years are about 4000 to one against. Far lower odds than a lottery, but an unhappy outcome to win.

Someone once told me that life insurance is like betting against the home team. No matter what happens, you are unhappy.

Another viewpoint

Buying life insurance on your own life cannot win for you personally. It would win for family, business partners, creditors, and perhaps others, but they don’t give up the money for the premium. Thus the problem. No one likes spending money for a no win deal.

The death benefit in life insurance is not selfish and you should consider it.

There are other advantages to cash value life insurance that could influence the decision towards you owning it for selfish reasons and that is a topic for another day.

Think about meaning

You can have a successful life without the lottery win. It might be less good for others if there is a premature death.

Keep risk management in perspective and it will make more sense. The odds are the general case. They don’t matter to you. You can’t be one four thousandths dead. Or 3,999 four thousandth alive.

See the outcome if the one chance happens and plan ahead.

I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. 705-927-4770

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