What The Existence of Insurance Companies Tells Us About Life

Why you should let go of unreasonable fears.

Earlier when I was doing something, I suddenly come across a random thought.

In our daily lives, a lot of times we will come across different fears. Not everybody will, but sometimes the thoughts just cross our minds randomly. For example, when we are crossing roads, sometimes we think about being hit by cars; or when we are driving, we worried about traffic accidents; or when we are doing some sports, we are afraid of being injured; etc.

Insurance companies have existed for a long time, they earn profit mostly by subscription business model, where they guarantee a payback if one day you get into trouble. The payback is typically a lot larger than the total subscription payments we paid regularly. But then look at them, more and more companies are emerging and offering many types of insurance. This shows that the insurance company is still a profitable business.

The reason they are able to still earn profits and keep on expanding is that the rate of accidents is still very low in general. Why so? As mentioned, insurance companies made money by the subscription methods, in which they gain profits by the margin of the total subscription payments by the clients and the total payback they have to pay for clients that get into accidents. As they keep on expanding, it means that this margin is pretty huge.

Looking from the perspective of life, we can generally assume that accidents rarely happen. This also means that in life, we don’t really have to fear too many things or overthink about too many things because unlucky incidents rarely happen. However, it is not to say that it never happens, because it actually does happen sometimes. The point is to stop worrying too much and take as many precautions as possible. Balance is the key.