There are terrible events that happen in everyone’s lives. I’m not just talking about death or sickness, I’m thinking more along the lines of someone having their home broken into, getting their identity stolen or buying pet insurance. Whenever something like this happens to someone, I like to refer to it as winning the “crap lottery.”

The reality is that something happening is very unlikely. That’s the whole business model of insurance. They collect premiums from thousands of people, paying out a small fraction of them every year. It’s the same for alarm companies or identity theft companies. Unless you live in a very high risk neighborhood, the risk of getting your home broken into is exceedingly low. Sure, it might happen. It just isn’t very likely.

Insurance of every form boils down to one question: How much are you willing to pay to avoid the crap lottery? Of course, one can never fully avoid the bad things that inevitably happen to all of us. Every insurance policy forces the policy holder to weigh the option of “I’m protected against whatever for this much per month.” It’s then up to each person to decide whether the premium is worth it.

I’m going to Vegas in about 3 weeks. I bought medical insurance for $2.01 per day. I’m the first to admit that the odds of me getting so sick that I’ll have to go to the hospital are probably less than a tenth of one percent. I was willing to pay less than $20 to make sure that if I win the crap lottery, I’m covered. Someone else could tell me that’s a bad financial decision, factoring in the odds of getting sick. And they’d be absolutely right.

Insurance in it’s many forms is strictly a personal decision. Even though I disagree with the very notion of getting an alarm system, if you’re a single person who needs it to sleep through the night, then knock yourself out. Seemingly financial decisions aren’t always about just money.

When it comes to life insurance, I’d argue the best life insurance you could ever have are a bunch of income producing assets that seamlessly pass onto your spouse/kids when you pass away, with a succession plan in place. You may argue that self insurance is a pipe dream, (and you may be onto something) but the very act of working towards it is going to be a positive.

Tell everyone, yo!