Use a logical framework to assess risk, not your emotional gut feeling.
The Shark Attack vs. the Bathtub Slip.
Your brain is a terrible risk analyst. It is terrified of the dramatic, headline-grabbing shark attack, a risk that is statistically almost zero. Yet, it is completely complacent about the boring, everyday risk of slipping in the bathtub, which is a far more common and serious danger. Your emotional gut is a bad pilot. A logical framework—looking at the actual probability and the potential severity of a risk—is the professional autopilot. It allows you to focus your resources on protecting yourself from the real, mundane dangers, not the exciting, imaginary ones.
Stop making insurance decisions based on fear. Do use data and probabilities to guide your choices instead.
The Weather Report vs. Hiding in the Basement.
Making insurance decisions based on fear is like hiding in your basement every single day because you are afraid a tornado might strike. It is an exhausting and irrational way to live. A smarter approach is to look at the weather report—the actual data and probabilities. This allows you to assess the real, statistical likelihood of a storm. Insurance is a mathematical tool, not an emotional one. By using the same data-driven approach the insurance company uses, you can make calm, rational decisions about which storms are worth preparing for.
Stop avoiding the topic of insurance because it feels morbid. Do embrace it as a tool for financial empowerment instead.
Planning a Funeral vs. Writing a Love Letter.
The myth is that talking about life or disability insurance is a morbid act of planning for your own death. This is looking through the wrong end of the telescope. The reality is that it is the ultimate act of financial empowerment and responsibility. You are not planning for your death; you are writing the final, most powerful love letter to your family. You are ensuring that in your absence, their lives can continue with dignity and without financial struggle. It’s not about a morbid ending; it’s about a beautiful, protected beginning for them.
The #1 secret reason you buy the insurance you do is “social proof”—you’re copying what your friends and family do.
The Restaurant with the Long Line.
Imagine you are in a new city and see two restaurants. One is empty, and the other has a long line out the door. You will almost certainly choose the one with the line. This is “social proof.” We are hardwired to assume that if a lot of other people are doing something, it must be the right thing to do. The #1 secret is that most of your insurance decisions are not based on rational analysis; they are based on this instinct. You buy the same type of policy your parents have, not because it’s the best, but because it feels safe.
I’m just going to say it: You hate paying your insurance premiums because of “loss aversion,” even though you’re paying for valuable peace of mind.
The Pain of a Small, Certain Loss vs. the Relief of Avoiding a Big, Uncertain One.
“Loss aversion” is a powerful psychological bias. It means that the pain of losing $100 feels twice as bad as the pleasure of gaining $100. Your monthly insurance premium is a small, certain, and immediate loss. Your brain hates it. The benefit you are buying—the avoidance of a huge, uncertain, future loss—is abstract and feels less real. You are feeling the pain of the certain payment much more acutely than the peace of mind you are receiving in return. It’s an irrational but powerful emotional calculation.
The reason you’re underinsured is because of “optimism bias”—the irrational belief that bad things are less likely to happen to you.
The “It’s a Wonderful Life” Bias.
“Optimism bias” is the little voice in your head that whispers, “That won’t happen to me. I’m a good driver. I’m healthy.” It is the natural, and often wonderful, human tendency to believe that we are less at risk than the people around us. While this is a great mindset for happiness, it is a catastrophic one for financial planning. It is the irrational belief that your car won’t crash and your house won’t burn down, and it is the single biggest psychological reason that most people are dangerously underinsured.
If you’re still choosing a $0 deductible health plan, you’re losing money due to “ambiguity aversion”—a preference for known costs over unknown ones, even if the known cost is higher.
The Expensive All-Inclusive Resort vs. the Cheaper Pay-as-You-Go Hotel.
“Ambiguity aversion” is your brain’s preference for certainty, even when it’s expensive. A $0 deductible health plan feels safe, like an all-inclusive resort where all the costs are known upfront. A high-deductible plan has some unknown future costs, which makes your brain uncomfortable. The math, however, often shows that the high-deductible plan is far cheaper in total, even in a bad year. You are choosing to pay a much higher, certain premium just to avoid the psychological discomfort of an unknown, but likely lower, future cost.
The biggest lie your brain tells you is that you can “self-insure” for a catastrophic risk.
Your Savings Account Is a Bucket of Water, Not a Fire Department.
“Self-insure” is a dangerously misleading term your brain uses to make you feel smart and in control. The reality is that you are just “uninsured.” Insurance is the transfer of a risk that is too large for you to handle on your own. Your savings account is a bucket of water. It is a great tool for putting out a small fire in a trash can. But a catastrophic risk, like a multi-million dollar lawsuit or a total house fire, is a raging inferno. For that, you do not need a bucket; you need the overwhelming, professional power of the fire department.
I wish I knew about “analysis paralysis” when I was first trying to choose a Medicare plan.
The Diner with a 50-Page Menu.
“Analysis paralysis” is the feeling of being so overwhelmed by options that you become frozen and unable to make a decision at all. The world of Medicare, with its dozens of different plans and options, is like being handed a 50-page menu at a diner when all you want is breakfast. The sheer volume of information is paralyzing. This often leads people to make no decision at all, or to just pick the first thing they see out of frustration. It is a cognitive trap that is built into the complexity of the system.
99% of people make this one mistake: they succumb to the “status quo bias” and let their inadequate policies renew year after year.
The “Comfortable Old Chair” That’s Secretly Broken.
“Status quo bias” is our brain’s powerful, built-in preference for keeping things the way they are. It is the deep, psychological comfort of the familiar. Letting your insurance policy auto-renew every year feels easy and safe, like sinking into your favorite old chair. But that chair might be secretly broken and dangerously inadequate for your current needs. The small, uncomfortable effort of getting up and shopping for a new chair is the only way to ensure you’re not just comfortable, but also safe.
This one small action of automating your premium payments will overcome the “pain of paying” and ensure your coverage never lapses.
Remove the Monthly “Sting” from the Transaction.
Psychologically, the act of manually writing a check or entering a credit card number every month creates a “pain of paying.” It forces you to consciously feel the loss of that money. This pain can lead to procrastination and missed payments. The simple, powerful action of setting up automatic payments removes this sting. It transforms the painful, monthly decision into a single, “set it and forget it” action. The bill is paid, the coverage never lapses, and you are spared the recurring psychological pain of the transaction.
Use a “decision journal” to document why you bought a policy, not just relying on your flawed memory.
The “Captain’s Log” of Your Financial Journey.
Your memory is a terrible and biased historian. Two years from now, you will not accurately remember why you chose a specific insurance policy. A “decision journal” is the official Captain’s Log of your thought process. In a simple notebook, you write down the date, the decision you made, the options you considered, and the specific reasons you chose the one you did. This creates a rational, unbiased record that you can look back on, allowing you to learn from your past decisions and avoid the tricks of a faulty memory.
Stop focusing on the small possibility of a denied claim. Do focus on the “large probability” that a covered claim will be a financial lifesaver instead.
The Fear of a Single Leaky Lifeboat vs. the Certainty of the Sinking Ship.
Our brains are wired to focus on negative possibilities. We hear one story about a denied claim and become terrified of all insurance. This is like seeing one, single leaky lifeboat and deciding that you would rather just stay on the sinking Titanic. The reality is that the vast, overwhelming majority of legitimate claims are paid, and they are financial lifesavers for the families who receive them. You must focus on the massive, statistical probability of the tool working, not the small, anecdotal chance of it failing.
Stop falling for the “scarcity” tactic in insurance marketing (“this offer ends Friday!”). Do take your time to make a good decision.
The “Limited-Time” Offer That Is Never Actually Limited.
“Scarcity” is one of the oldest and most powerful psychological sales tactics. The phrase “this special offer ends on Friday!” is designed to create a sense of urgency and shut down the logical, analytical part of your brain. It forces you into an emotional, fear-based decision. The reality is that insurance is not a limited-edition sneaker. The offer will almost certainly be there next week. A good insurance decision is a slow, deliberate, and rational one. You should never, ever let an artificial deadline rush you.
The #1 psychological hack insurers use is “anchoring”—showing you a high “regular” price before revealing the “discounted” price.
The $100 T-Shirt That’s Suddenly a “Bargain” at $50.
“Anchoring” is a powerful cognitive bias. Our brains latch onto the first piece of information we receive. Insurance quote websites are masters of this. They will first show you a high, “standard” monthly premium. That number becomes the anchor in your mind. Then, a moment later, they will apply a series of “discounts” and reveal a lower, final price. Your brain no longer sees the final price in a vacuum; it sees it as a fantastic “bargain” compared to the high anchor price it just saw, even if it’s still not the best deal.
I’m just going to say it: Your loyalty to your insurance agent is an emotional decision that is likely costing you money.
The Friendship That Has a Hidden Financial Cost.
You like your agent. They are a nice person, they send you a calendar every year, and you have a comfortable relationship. This is an emotional bond, not a financial strategy. The insurance market is a dynamic, competitive place. The company that was the best fit for you three years ago is rarely the best fit today. Your emotional loyalty and your desire to avoid an awkward “break-up” conversation are likely costing you hundreds of dollars a year. Your first loyalty must be to your own financial well-being.
The reason you don’t have disability insurance is because you can’t visualize your disabled self, a cognitive bias known as “projection bias.”
The “Healthy You” Making Decisions for the “Sick You.”
“Projection bias” is our brain’s inability to imagine ourselves in a truly different emotional or physical state. The healthy, vibrant, and capable you of today is making financial decisions. That person finds it almost impossible to truly empathize with or visualize a future, disabled you who is in pain and unable to work. Because the current, healthy you cannot imagine that future state, you dramatically underestimate its probability and its impact, and therefore fail to properly prepare for it.
If you’re still focusing on the premium instead of the value, you’re letting “price sensitivity” cloud your judgment about the coverage you’re getting.
The “Sticker Price” vs. the “Total Cost of Ownership.”
Focusing only on the monthly premium is like buying a car based only on its sticker price, without looking at its safety rating or its fuel efficiency. This is “price sensitivity.” A cheap policy with a huge deductible and gaping holes in its coverage is the “cheap” car that will cost you a fortune in repairs and medical bills after the first crash. A truly smart decision looks past the immediate pain of the premium and focuses on the “total cost of ownership,” which includes the massive, uncovered costs of a poorly designed plan.
The biggest lie is that you are a rational actor when it comes to financial decisions. You are not.
The Logical “Spock” vs. the Emotional “Kirk.”
The biggest lie of traditional economics is that we are all logical, rational beings who make decisions like Mr. Spock. The reality, proven by decades of behavioral economics, is that we are all Captain Kirk. Our financial decisions are driven by a chaotic and powerful mix of fear, greed, optimism, and a host of other cognitive biases. Acknowledging that you are an emotional, and often irrational, actor is the first and most important step to creating systems and working with advisors who can protect you from your own worst instincts.
I wish I knew that the feeling of regret is a powerful motivator, which is why insurance for small risks (like phone insurance) is so popular.
The “Mini-Regret” You’re Willing to Pay to Avoid.
“Regret aversion” is a powerful psychological force. We will often take irrational steps to avoid the feeling of “I should have…” The risk of cracking your phone screen is a small, manageable financial event. But the feeling of regret is so powerful that we are willing to pay a high price for a phone insurance policy just to avoid it. The irony is that we will happily pay to avoid the “mini-regret” of a broken phone, but we will fail to protect ourselves from the catastrophic, life-altering regret of a house fire or a major disability.
99% of people make this one mistake: they overestimate the probability of dramatic, rare events (like a plane crash) and underestimate the probability of common, mundane events (like a car accident). This is the “availability heuristic.”
The Shark in the Ocean vs. the Pothole in the Road.
The “availability heuristic” is a mental shortcut where our brain judges the likelihood of an event by how easily we can recall an example. Because a plane crash is dramatic, heavily covered by the media, and easy to visualize, our brain thinks it is a common risk. A simple, boring, rear-end car accident is so common that it is invisible. This leads us to be terrified of the statistically insignificant shark, while being completely complacent about the statistically massive and real danger of the pothole in the road right in front of us.
This one small action of asking, “What would a completely rational person do in my situation?” will help you overcome emotional biases.
The “Spock” in Your Head That Can Save You from “Kirk.”
When you are faced with a complex, emotionally charged financial decision, it is easy to get lost in the fog of your own biases. The simple, powerful action of pausing and asking yourself this one question forces you to take a step outside of your own emotional brain. It activates the logical, “Mr. Spock” part of your mind and allows you to look at the situation from a detached, third-person perspective. It is the one question that can help you separate the logical path from the emotional one.
Use a fiduciary advisor to counteract your own biases, not just relying on your own judgment.
The “Co-Pilot” Who Can See the Blind Spots You Can’t.
You are the pilot of your own financial plane, but you are flying with a set of known, and often dangerous, psychological blind spots. A fiduciary advisor is the professional co-pilot sitting next to you. Their job is not just to help you fly the plane, but to watch for and point out the blind spots in your own decision-making. They are the objective, rational voice in the cockpit who can see the emotional storm clouds forming and help you navigate around them safely.
Stop being influenced by the cartoon gecko or the funny general. Do realize that “affect heuristic” (making decisions based on emotion) is a poor way to choose a complex financial product.
The Funny Commercial That Sells You a Faulty Parachute.
The “affect heuristic” is a mental shortcut where you make a decision based on your emotional “gut feeling” about something. Insurance companies know this, and they spend billions of dollars to create funny, lovable mascots that make you feel warm and fuzzy about their brand. Choosing an insurance policy because you like the gecko is like choosing a parachute because you like the color of the bag it comes in. It is an emotional decision that has absolutely nothing to do with the quality of the complex, legal product inside.
Stop thinking of insurance as a bet you want to “win.” Do think of it as a tool you hope you never have to use.
The Poker Game vs. the Fire Extinguisher.
The myth is that insurance is a “bet” against the company, and if you never have a claim, you “lost.” This is a deeply flawed mindset. Insurance is not a poker game. It is a fire extinguisher that you buy and mount on your wall. You do not spend every day hoping that your house will burn down so that you can “win” by getting to use your fire extinguisher. The real “win” is the silent, daily peace of mind that comes from knowing that the tool is there, ready and waiting, if the disaster you hope never happens actually occurs.
The #1 psychological trap is “mental accounting,” where you treat your insurance premium as a “loss” instead of as part of your overall budget for financial security.
The “Fun Money” vs. the “Boring Bill.”
“Mental accounting” is our brain’s tendency to put our money into different, imaginary buckets. We have our “fun money” bucket, our “vacation” bucket, and our “boring bills” bucket. We incorrectly place our insurance premium into the “boring bills” bucket, where it feels like a loss. The correct bucket is the “Financial Security” or “Peace of Mind” bucket. By reframing the premium as a proactive contribution to your own well-being, you can transform it from a painful loss into a positive, empowering investment.
I’m just going to say it: The peace of mind that insurance provides is a real, tangible product, even if you never file a claim.
The Invisible Shield You Wear Every Single Day.
We think of insurance as only “working” on the day we file a claim. This is a massive misunderstanding of the product. The core product you are buying with your premium is not the future check; it is the present-day peace of mind. It is the ability to go to work, to drive your car, and to live in your house without the crushing, background anxiety of “what if?” It is an invisible, psychological shield that you are wearing every single day. That feeling of security is a real, valuable, and tangible benefit that you receive from day one.
The reason you buy lottery tickets but not disability insurance is that your brain is wired to prefer a small chance of a huge gain over avoiding a small chance of a huge loss.
The Thrill of the Win vs. the Boring Logic of the Loss.
This is a fundamental and irrational quirk of the human brain. We are captivated by the tiny, remote possibility of a life-changing lottery win. The emotional thrill of that possibility completely overrides the mathematical certainty that it won’t happen. At the same time, we are bored by the statistically much higher probability of a life-changing disability. The lottery offers a dopamine hit of hope; disability insurance offers only the boring, logical relief of avoiding a disaster. Our brain is wired to chase the thrill, not the logic.
If you’re still making decisions based on anecdotes from friends (“my cousin had a bad experience with that company”), you’re losing the benefit of large-scale statistical data.
The “One-Star Yelp Review” vs. the “Michelin Guide.”
Making a major financial decision based on your cousin’s one bad experience is like avoiding an entire restaurant chain because of a single, one-star Yelp review. It is an emotional, anecdotal data point of one. The insurance industry is built on the law of large numbers. To make a smart decision, you need to use the same tools. Look at the large-scale, statistical data—the company’s AM Best rating, their JD Power claims satisfaction score—which is the “Michelin Guide” that is based on thousands of data points, not just your cousin’s cold French fries.
The biggest lie your brain tells you is, “I’ll deal with it later.” Procrastination is the enemy of good insurance planning.
The “Someday” That Lives on a Calendar Full of “Todays.”
Procrastination is the silent assassin of financial security. Your brain tells you that insurance is a problem for “future you” to deal with. But “future you” will be older, potentially less healthy, and will face a higher premium. “Today you” is the youngest and healthiest you will ever be again, and has access to the best prices you will ever see. The biggest lie is that there is a magical, perfect “someday” to deal with this. The reality is a calendar full of todays, and you are wasting the most valuable one you have.
I wish I knew how powerful the “endowment effect” was—the tendency to overvalue something (like your old, inadequate policy) simply because you already own it.
The “My Old Car” Bias That Costs You Money.
The “endowment effect” is a psychological quirk where we place a higher value on an item simply because we own it. It’s the reason you think your beat-up old car is worth more than the identical car on a used car lot. This bias is powerful in insurance. We will stick with our old, familiar, and often inadequate insurance policy, overvaluing its comfort and familiarity, and undervaluing the new, superior, and cheaper options that are available, simply because the old one is already “ours.”
99% of people make this one mistake: they are “hyperbolic discounting,” placing too much value on the immediate reward of a lower premium and not enough on the future reward of better coverage.
The “One Marshmallow Now vs. Two Marshmallows Later” Test.
“Hyperbolic discounting” is the famous “marshmallow test” of finance. Our brains are wired to place a huge value on an immediate, small reward (one marshmallow now) and a much lower value on a larger, delayed reward (two marshmallows later). When we are shopping for insurance, the small, immediate reward of a lower monthly premium feels incredibly powerful. We will often choose that “one marshmallow,” even if it means giving up the much more valuable “two marshmallows” of better coverage that we might need in the future.
This one small action of creating a simple checklist of your needs before you shop will prevent you from being swayed by emotional sales tactics.
The “Grocery List” That Protects You from the “Impulse Buys.”
Going into a meeting with an insurance agent without a plan is like going to the grocery store when you are hungry and without a list. You are guaranteed to walk out with a cart full of expensive, unhealthy, and unnecessary impulse buys. The simple, powerful action of creating a checklist of your specific needs and goals before you talk to a salesperson is your grocery list. It keeps you focused, it protects you from emotional sales tactics, and it ensures that you walk out with the healthy, necessary items you actually came for.
Use a “catastrophe fund” (your insurance policy) for large, unexpected events, not your small emergency fund.
The Bucket of Water vs. the Fire Hydrant.
Your emergency fund is a bucket of water. It is a fantastic, essential tool that is perfectly designed to handle the small, predictable fires of life, like a car repair or a leaky faucet. Your insurance policy is the fire hydrant. It is a much more powerful tool that is specifically designed for the massive, catastrophic, and unpredictable infernos, like a house fire or a multi-million dollar lawsuit. The biggest mistake is trying to fight the inferno with your small bucket; it will be empty in seconds.
Stop looking for the “perfect” insurance policy. Do accept that the “best” policy is the good one you actually put in force.
The “Perfect” Workout Plan vs. the “Good Enough” One You Actually Do.
The search for the “perfect” insurance policy is a form of procrastination. It is like searching for the absolute, scientifically perfect workout plan. You can spend months researching and comparing, and in the end, you will have done nothing. A good, solid insurance policy that you actually buy and put in force today is infinitely and powerfully better than the “perfect” policy that only exists in your spreadsheet. The “best” plan is the one that is actually protecting you when the disaster strikes.
Stop letting the complexity of insurance intimidate you. Do realize this is often a deliberate tactic to encourage “decision fatigue” so you’ll just accept the default option.
The “Too Many Choices” Menu That Pushes the Daily Special.
The complexity and the sheer number of choices in the insurance world are not always an accident. It is a feature, not a bug. It is designed to create “decision fatigue.” It’s like a restaurant that gives you a 50-page menu. After a few minutes, you are so overwhelmed that when the waiter suggests the “daily special,” you just gratefully accept it out of exhaustion. The complexity pushes you towards the easy, and often more profitable, default option, because you are too tired to do the hard work of choosing for yourself.
The #1 psychological reason people hate insurance companies is the perceived unfairness of the claims process.
The “Violation of the Handshake” Feeling.
At its core, an insurance policy is a promise, a handshake deal. You promise to pay your premiums, and the company promises to be there for you when disaster strikes. The deep, visceral anger that people feel during a claims dispute comes from a feeling that this fundamental promise has been broken. The process feels unfair. It feels like the powerful, multi-billion dollar corporation is using its army of lawyers and its complex rulebook to get out of a simple, honest handshake. It is this perceived violation of fairness that creates the most intense frustration.
I’m just going to say it: You feel better about paying for health insurance than life insurance because the benefits are more immediate and tangible (e.g., doctor visits).
The “Small, Regular Wins” vs. the “One, Big, Abstract Win.”
Your brain loves small, frequent rewards. When you pay your health insurance premium, you are rewarded with immediate, tangible benefits. You can go to the doctor, you can get a prescription filled, you can see the policy working. Life insurance is different. The premium is a small, certain loss, and the benefit is a huge, abstract, and far-off event that you will never personally experience. Your brain has a much harder time valuing that distant, abstract promise over the immediate, tangible benefits of the health plan.
The reason you chose the middle-of-the-road option is the “compromise effect,” not because it was actually the best fit for your needs.
The “Good, Better, Best” Trap.
The “compromise effect” is a powerful psychological bias. When presented with three options—a cheap, basic one; a super-expensive, premium one; and a middle-of-the-road one—our brain is naturally drawn to the “safe” middle option. It feels like a smart, balanced compromise. The reality is that this is a classic sales tactic. You may have chosen the middle option not because it was the best fit for you, but simply because it was the most comfortable and least extreme choice on the menu that was presented to you.
If you’re still holding onto a policy sold to you by a a family friend you don’t trust, you’re letting “social obligation” jeopardize your financial future.
The Awkward Thanksgiving Dinner vs. a Secure Financial Future.
The feeling of “social obligation” is a powerful and often destructive force in our financial lives. You are holding onto an inadequate or overpriced insurance policy because it was sold to you by a friend or a relative, and you are afraid of the awkward conversation that would come from firing them. You are prioritizing the avoidance of a few moments of social discomfort over the long-term health and security of your family’s financial future. Your loyalty must be to your family’s well-being, not to a peaceful Thanksgiving dinner.
The biggest lie is that you can accurately predict your future needs and risks.
The “Crystal Ball” That Is Always Foggy.
The biggest lie our brains tell us is that we are good fortune tellers. We believe we can accurately predict our future health, our future income, and the risks that we will face along the way. The reality is that our crystal ball is, and always will be, hopelessly foggy. Life is defined by its unpredictability. The very purpose of insurance is to act as a powerful shield against that inherent uncertainty. It is the tool you use precisely because you know that you cannot predict the future.
I wish I knew that my desire to avoid paperwork was a significant psychological barrier to getting the right coverage.
The “Hassle” vs. the “Hurricane.”
Our brains are wired to avoid small, immediate hassles, even if it means taking on a huge, future risk. The process of applying for insurance—the paperwork, the medical exam—is a known, immediate hassle. And so we procrastinate. We are allowing our desire to avoid a small, one-time inconvenience to prevent us from protecting ourselves from a catastrophic, life-altering hurricane. Understanding that this is an irrational trade-off is the first step to pushing through the small, temporary pain to achieve the huge, long-term gain.
99% of people make this one mistake: they succumb to “confirmation bias,” only seeking out information that confirms their existing beliefs about a certain type of insurance.
The Echo Chamber of Your Own Opinions.
“Confirmation bias” is our brain’s tendency to act like a loyal yes-man. It actively seeks out information that agrees with our pre-existing beliefs and actively ignores or dismisses any information that challenges them. If you believe all annuities are a rip-off, you will only click on the articles and listen to the gurus who confirm that belief. This creates a dangerous echo chamber that prevents you from ever making an objective, well-rounded decision. The only way to escape is to actively seek out the intelligent people who disagree with you.
This one small action of sleeping on a major insurance decision for 24 hours will help you separate the emotional pitch from the logical facts.
The “Cooling-Off” Period for Your Emotional Brain.
A good salesperson is a master of creating an emotional response. They will use stories and tactics that are designed to make you feel a sense of urgency, fear, or excitement. The single best defense against this is to give your brain a “cooling-off” period. The simple action of saying, “Thank you, I will think about this and get back to you tomorrow,” allows the emotional heat of the sales pitch to dissipate. It gives the logical, rational part of your brain time to wake up, look at the facts, and make a decision based on the numbers, not just the story.
Use an independent agent to act as a “choice architect,” helping you navigate complex options without feeling overwhelmed.
The “Curator” for Your Financial Art Museum.
The world of insurance can be a massive, overwhelming museum with thousands of different exhibits. Trying to see it all on your own will lead to “decision fatigue.” A good independent agent is the expert curator for that museum. They will listen to your interests and your needs, and then they will guide you through the chaos, showing you only the three or four most important and relevant exhibits that you need to see. They are a “choice architect” who simplifies the complex and allows you to make a confident decision without being overwhelmed.
Stop thinking about the money you’ve “wasted” on premiums for policies you never used. Do reframe it as the price you paid for the security you enjoyed.
The Lifeguard Who Never Had to Jump in the Water.
If you hire a lifeguard to watch your children at a pool party and no one drowns, you do not go to the lifeguard at the end of the day and demand your money back because they didn’t have to “do anything.” You paid for their watchful, protective presence. Your insurance premium is the salary you pay to your financial lifeguard. The fact that you never had a claim is not a “waste”; it is the absolute best-case scenario. You have successfully paid for a year of valuable, stress-free peace of mind.
Stop letting “brand familiarity” from commercials be your primary decision-making tool.
The “Comfort Food” of Financial Decisions.
“Brand familiarity” is a powerful psychological shortcut. We are naturally drawn to the names and the mascots that we know and see every day. It feels safe and comfortable, like a financial comfort food. But just because a company has a massive advertising budget and a funny commercial does not mean they have the best product or the best price. Letting that warm, fuzzy feeling of familiarity be your primary guide is an emotional decision that can prevent you from discovering a less-famous but far superior company.
The #1 psychological secret is that insurance sells because it converts an unknown, potentially catastrophic loss into a known, manageable expense.
The “Taming of the Dragon.”
Our brains are terrified of uncertainty. A small, but unknown, risk of a catastrophic, financially ruinous event is a dragon that lives in the back of our minds, creating a constant, low-grade anxiety. Insurance is the magical sword that tames that dragon. It takes the terrifying, unknown, and potentially infinite cost of a house fire and transforms it into a known, predictable, and manageable monthly premium. It is the psychological alchemy of converting a terrifying unknown into a boring, manageable known, and that is the source of its power.
I’m just going to say it: People who brag about “self-insuring” are often just engaging in “virtue signaling” without having done the actual math on their risk exposure.
The “Tough Guy” Who Has Never Been in a Real Fight.
The person who proudly declares that they “self-insure” for major risks is often like the tough guy at the bar who brags that he has never been in a fight. They are engaging in a form of “virtue signaling,” trying to project an image of financial strength and independence. But they have often never truly sat down and done the brutal, honest math on what a multi-million dollar lawsuit or a long-term disability would actually do to their finances. They are not insured; they are just lucky, and their luck has not been tested yet.
The reason you’re more willing to insure your car than your income is that the car is a tangible object, making the risk feel more real (the “tangibility effect”).
The Dented Fender vs. the Invisible Paycheck.
The “tangibility effect” is a powerful bias. Your car is a solid, physical object that you can see and touch. The risk of a dented fender is a real, visceral, and easy-to-imagine event. Your future income, on the other hand, is an abstract, intangible concept. It is a stream of invisible numbers on a spreadsheet. Because the car is more tangible, the risk to it feels more real and more urgent, even though the financial value of your future income is a thousand times greater.
If you’re still buying insurance based on a slick advertisement, you’re falling for the “peripheral route to persuasion.”
The Sizzle vs. the Steak.
There are two ways to be persuaded. The “central route” is when you carefully analyze the logical arguments and the facts—the steak. The “peripheral route” is when you are swayed by superficial cues, like an attractive spokesperson, a catchy jingle, or a funny mascot—the sizzle. Insurance advertising is a masterclass in the peripheral route. It is designed to make you feel good about the brand, bypassing your logical brain entirely. A smart consumer ignores the sizzle and focuses on the nutritional content of the steak: the policy contract.
The biggest lie you tell yourself is, “I’m a safe driver, so I only need minimum liability.”
You’re a Great Pilot, But You Can’t Control the Other Planes.
This is the ultimate self-serving lie, born from a potent cocktail of optimism bias and overconfidence. You might be the best, safest, and most defensive driver in the world. But you are sharing the road with thousands of other drivers who are distracted, drunk, or just plain incompetent. Your good driving is a wonderful skill, but it cannot protect you from the driver who runs a red light and T-bones you. Your liability insurance is not just for your mistakes; it is for the chaotic and unpredictable actions of everyone else.
I wish I knew that the “framing effect” is huge in insurance—a policy framed as having a “95% chance of being claim-free” feels different than one with a “5% chance of a claim.”
The “90% Fat-Free” Yogurt vs. the “10% Fat” Yogurt.
The “framing effect” shows that the way information is presented to us has a massive impact on our decisions. A yogurt that is advertised as “90% fat-free” sounds like a healthy choice. A yogurt advertised as “containing 10% fat” sounds like a terrible one, even though they are the exact same product. Insurance is the same. A policy that is framed in the positive—”all the things it covers”—feels much more appealing than one that is framed in the negative—”all the things it excludes.” A smart consumer must learn to see past the frame and look at the picture itself.
99% of people make this one mistake: they don’t buy a policy because they can’t imagine the emotional state of their family after a tragedy.
The “Empathy Gap” That Paralyzes Your Planning.
This is a subtle but powerful psychological barrier. It’s a form of the “projection bias” called an “empathy gap.” The calm, rational, and happy you of today finds it almost impossible to truly imagine or empathize with the emotional state of your grieving, terrified, and overwhelmed family after your sudden death. Because you cannot feel what they will feel, you underestimate the profound value of the gift of financial security that a life insurance check would provide in that moment of chaos.
This one small action of talking about insurance with your partner will overcome the psychological barrier of treating it as a taboo subject.
Turning on the Light in the Dark, Scary Room.
For many people, insurance, money, and death are taboo subjects that are shrouded in a cloud of anxiety and discomfort. We don’t talk about them. This silence is a massive psychological barrier to good planning. The simple, powerful action of sitting down with your partner and having an open, honest conversation about these topics is like turning on the lights in a dark, scary room. It instantly makes the monster in the corner disappear, transforming a frightening, abstract concept into a manageable, shared team project.
Use a “risk matrix” (plotting probability vs. severity) to decide which risks to insure, not just your intuition.
The “Four-Box” Tool for Rational Decisions.
A risk matrix is a simple, powerful, and logical tool. You draw four boxes. For high-probability, high-severity risks, you must avoid them. For low-probability, high-severity risks (like a house fire), you transfer the risk by buying insurance. For high-probability, low-severity risks (like a cracked phone screen), you reduce and accept the risk. And for low-probability, low-severity risks, you simply accept them. This simple, four-box framework forces you to move beyond your emotional gut and make a logical, rational decision about every risk in your life.
Stop being “penny wise and pound foolish” by saving a few dollars on premiums for a policy with huge gaps.
The “Leaky Lifeboat” That Was a Bargain at the Dock.
This is the classic, age-old psychological trap. You are so focused on the immediate, tangible “penny” of the monthly premium that you completely lose sight of the massive, catastrophic “pound” of an uncovered claim. A cheap policy with a huge deductible and gaping exclusions is a leaky lifeboat. It might have been a bargain at the dock, but you will discover its true, and fatal, flaws when you are in the middle of a stormy sea and desperately need it to work. The price is irrelevant if the product doesn’t float.
Stop letting an agent’s “authority bias” (nice suit, fancy office) convince you without doing your own research.
The “White Coat” Effect in the Financial World.
“Authority bias” is our tendency to blindly trust someone who looks like they are in a position of authority. It is the reason we trust a doctor in a white coat. In the financial world, a sharp suit, a fancy office, and a confident demeanor can create the same effect. We assume the person is an expert and we stop asking tough questions. A smart consumer must learn to look past the “white coat” and do their own due diligence. You must verify their credentials and trust but verify their recommendations.
The #1 psychological reason people let policies lapse is that the pain of the premium is immediate, while the benefit is abstract and in the future.
The “Right Now” Brain vs. the “Someday” Brain.
Your brain is in a constant battle with itself. The impulsive, “right now” part of your brain wants immediate gratification. The disciplined, “someday” part of your brain is trying to plan for the future. The pain of an insurance premium is a “right now” event. The benefit of the policy is a “someday” event. The #1 reason for a lapse is that the “right now” brain wins the argument. It convinces you that the immediate reward of having that cash in your pocket today is more valuable than the abstract, future benefit of being protected.
I’m just going to say it: Your brain is not wired to accurately assess long-term risks, which is why insurance planning is so hard without a logical process.
The “Caveman Brain” in a Modern, Financial World.
Your brain evolved over millions of years to be an expert at assessing immediate, short-term, physical risks, like the saber-toothed tiger hiding in the bushes. It is spectacularly bad at assessing abstract, long-term, statistical risks, like the 1-in-4 chance of a disability over your 40-year career. You are trying to use an ancient, “caveman” operating system to navigate a modern, complex, financial world. This is why you must use logical tools and frameworks to override your faulty, and outdated, primal instincts.
The reason you don’t shop your insurance is “decision inertia”—it’s just easier to do nothing.
The “Path of Least Resistance” That Leads Off a Cliff.
“Decision inertia” is a powerful force. It is Newton’s first law of motion applied to your brain: an object at rest will stay at rest. The act of shopping for insurance requires a significant amount of mental energy—the “activation energy” to get the object moving. It is always, in the short term, easier to do nothing and just let the policy renew. This path of least resistance, however, is often the path that leads you right off a financial cliff of overpriced and inadequate coverage.
If you’re still thinking, “I’ll get to it next year,” you’re losing the battle against procrastination.
The “Tomorrow” That Never Comes.
Procrastination is the most powerful and insidious enemy of your financial security. The phrase “I’ll get to it next year” is a comforting lie your brain tells itself. It feels like a plan, but it is not. It is an act of kicking the can down a road that has no end. With every “next year,” you are getting older, you are risking a change in your health, and the price of the protection you need is going up. The only way to win the battle is to recognize that “tomorrow” is the most dangerous word in your financial vocabulary.
The biggest lie is that a confusing policy is a comprehensive policy. Complexity often hides exclusions.
The “Smoke and Mirrors” of a Complicated Contract.
The lie our brains tell us is that if something is complicated and hard to understand, it must be sophisticated and high-quality. The reality, in the insurance world, is often the exact opposite. Unnecessary complexity is not a feature; it is a bug. It is a form of smoke and mirrors that is often used to hide the weaknesses of a policy. A truly great, high-quality insurance contract is often the one that is the most clear, the most direct, and the easiest to understand. Simplicity is a sign of strength, not weakness.
I wish I knew that my discomfort with talking about money was preventing me from getting the right financial protection.
The “Polite” Silence That Is Secretly a Financial Disease.
In many cultures, talking about money, death, and risk is considered taboo. It is a polite, but incredibly dangerous, silence. This discomfort is a massive psychological barrier that prevents us from having the open, honest conversations with our partners and our advisors that are necessary to build a real financial plan. This “politeness” is a silent disease that allows risks to fester, unaddressed, until they erupt into a full-blown financial crisis. The only cure is the courage to have the uncomfortable conversation.
99% of people make this one mistake: they are swayed by the “liking bias” and buy an unsuitable policy from an agent they find charming.
The “Friendly” Salesperson Who Sells You a Lemon.
The “liking bias” is our natural, human tendency to say “yes” to people we know and like. A great salesperson is a master of building this rapport. They are charming, they are friendly, they remember your kids’ names. The mistake is to let this emotional connection override your logical, financial judgment. You can, and should, separate the two. You might really like the salesperson, but that does not mean that the lemon of a policy they are selling is the right car for you.
This one small action of calculating your “human life value” (your future earning potential) will make the need for life and disability insurance psychologically real.
The “Multi-Million Dollar Asset” You Didn’t Know You Owned.
The abstract need for life insurance can be hard to grasp. The simple, powerful action of calculating your “human life value” makes it brutally, tangibly real. A 30-year-old earning $75,000 a year has a future earning potential of over $2.6 million. This is a real, economic asset, just like a house. This one calculation transforms the abstract idea of “your income” into a massive, multi-million dollar asset on your personal balance sheet. It is the number that makes the need to insure that asset psychologically and mathematically undeniable.
Use the “rule of thumb” of having 10x your income in life insurance as a starting point to overcome “anchoring” on your employer’s 1x salary benefit.
The Flawed “Anchor” vs. the Smarter “First Guess.”
Your employer’s “one times salary” life insurance benefit is a powerful and dangerous psychological “anchor.” It becomes the default number in your head, and it is almost always dangerously inadequate. A “rule of thumb,” like having ten times your income, is not a perfect calculation, but it is a much smarter and more realistic starting point. It is a better “first guess” that breaks you free from the flawed anchor of the group plan and gets you much closer to the real number your family would need to survive.
Stop the “ostrich effect”—burying your head in the sand and ignoring obvious risks because they are unpleasant to think about.
The “If I Don’t See It, It Can’t Hurt Me” Fallacy.
The “ostrich effect” is the cognitive bias of avoiding negative information because it is scary or unpleasant. It is the financial equivalent of burying your head in the sand. We know that we need to think about disability and long-term care, but the topics are so frightening that we simply choose to ignore them. But ignoring a risk does not make it go away; it simply guarantees that you will be completely unprepared when it finally arrives. The only way to manage a risk is to have the courage to pull your head out of the sand and look it directly in the eye.
Stop comparing your insurance decisions to your neighbor’s. Your financial situations are different.
The “Keeping Up with the Joneses” of Risk Management.
“Social proof” can be a dangerous trap. Just because your neighbor, who has a completely different job, a different net worth, and a different family situation, chose a certain type of policy does not mean it is the right one for you. This is the “keeping up with the Joneses” approach to your financial safety net. A smart insurance plan is not a copy of someone else’s; it is a custom-tailored suit of armor that is designed to fit the unique and specific contours of your own financial life.
The #1 psychological trap for new parents is the overwhelming emotion of the moment, which can lead to buying expensive and unnecessary child-specific policies.
The “Fear-Based” Purchase for Your Most Precious Asset.
When you have a new baby, you are in a state of heightened emotional vulnerability. You will do anything to protect this new, precious life. The #1 trap is the slick marketing for child-specific insurance policies, like small whole life plans or cancer policies. These products are sold on fear and emotion, and they are almost always an expensive and inefficient use of your money. A new parent’s first and most important job is to get a large term life insurance policy on themselves, the parents, not to buy a small, unnecessary policy for the child.
I’m just going to say it: The relief you feel after finally buying the insurance you’ve been putting off is a real psychological benefit.
The “Mental Weight” You Didn’t Know You Were Carrying.
Procrastinating on an important financial decision creates a real, tangible, and heavy “mental weight.” It is a low-grade, background anxiety that you carry with you every single day. The act of finally taking responsibility and putting the right insurance in place is not just a financial transaction; it is an emotional one. The feeling of relief that washes over you when you have finally checked that box is a real, powerful, and valuable psychological benefit. It is the lifting of a weight that you didn’t even realize you were carrying.
The reason you’re afraid of your insurance agent is a fear of being “sold,” which prevents you from seeking the advice you need.
The “Fear of the Doctor’s Shot” That Prevents You from Getting a Cure.
Many people are so afraid of a high-pressure sales pitch that they avoid talking to an insurance agent altogether. This is like being so afraid of getting a shot that you refuse to go to the doctor, even when you are sick. This fear of being “sold” is a powerful psychological barrier that prevents you from getting the professional advice and the financial “medicine” that you desperately need. A good advisor is not a salesperson; they are a professional diagnostician. You must overcome the fear of the shot to get the cure.
If you’re still making insurance decisions when you’re stressed or tired, you’re losing your ability to make rational choices.
The “Sleep-Deprived Pilot” Flying Your Financial Plane.
Your brain’s ability to make complex, rational decisions is a finite resource, like a muscle that gets tired. Trying to make a major financial decision when you are stressed, tired, or emotionally drained is like asking a sleep-deprived pilot to land a plane in a storm. You are guaranteed to make mistakes. The most important insurance decisions of your life should be made when you are calm, rested, and in a clear state of mind. You must give your inner pilot a chance to be at their best.
The biggest lie is that you can handle the emotional and financial fallout of a major disaster without a plan.
The “Tough Guy” Who Thinks He Can Stop a Hurricane by Yelling at It.
The biggest lie our egos tell us is that we are strong enough to handle anything. The reality is that a catastrophic, life-altering event—a death, a disability, a fire—is not a test of your strength; it is a financial and emotional hurricane. No one can simply “tough out” a hurricane. A good insurance plan is the pre-built storm shelter. It is the humble, rational admission that you cannot control the storm, and that you have taken the necessary, logical steps to ensure your family can survive it.
I wish I knew that understanding my own psychological biases was the first step to making better financial decisions.
The “Know Thyself” of Financial Planning.
The ancient Greek aphorism “know thyself” is the most important and most overlooked piece of financial advice. You are not a rational robot. You are a bundle of emotional biases—optimism, loss aversion, procrastination. The first and most powerful step to making better financial decisions is to simply acknowledge and understand your own, unique set of psychological weaknesses. By knowing your own blind spots, you can create systems and work with advisors who can protect you from your own worst, and most human, instincts.
99% of people make this one mistake: they succumb to the “sunk cost fallacy,” continuing to pay for a bad policy because they’ve already put so much money into it.
The “Bad Movie” You Keep Watching Because You Paid for the Ticket.
The “sunk cost fallacy” is a powerful psychological trap. It’s the reason you will sit through a terrible movie just because you paid $15 for the ticket. You feel like you’ve already “invested” in it. The same is true for a bad insurance policy. You will continue to pour good money after bad, paying the premiums on an overpriced or inadequate policy, simply because you’ve already paid so much into it. The rational move is to cut your losses and walk out of the theater, but the sunk cost fallacy keeps you glued to your seat.
This one small action of separating the insurance decision from the agent decision will lead to better outcomes.
Choose the Restaurant First, Then Talk to the Waiter.
We often conflate the product with the salesperson. The simple, powerful action of separating these two decisions will lead to a much better result. First, do your own research and decide on the type of policy and the company you think is the best fit. You are choosing the restaurant. Then, and only then, you can interview and choose the agent (the waiter) you want to work with to actually purchase and service that product. This prevents the “liking bias” of a charming waiter from convincing you to eat at a bad restaurant.
Use the “pre-mortem” technique: imagine a future where a financial disaster happened and ask, “What could I have done today to prevent this?”
The “Time Traveler” Who Can Prevent the Catastrophe.
A “pre-mortem” is a powerful psychological tool that allows you to become a financial time traveler. You transport yourself five years into the future and imagine that a complete financial disaster has occurred. Your family is in ruins. Then, you ask yourself one simple question: “Looking back from this terrible future, what is the one thing I could have, and should have, done five years ago to prevent this from happening?” This simple act of reverse-engineering a future failure is the most effective way to identify the exact actions you need to take today.
Stop thinking of insurance as a product for “other people.” Do acknowledge that risk is a universal part of life.
The “It’s Not If, It’s When” Mentality.
The psychological trick we play on ourselves is to view a house fire or a car accident as a bizarre, freak event that only happens to “other people.” We see ourselves as the exception. The reality, proven by the law of large numbers, is that risk is a universal and unavoidable part of the human experience. A house fire is not a freak accident; it is a statistical certainty that will happen to a certain number of people every single year. The only question is whether you have a plan in place for when it is your turn.
Stop letting the sheer number of choices overwhelm you. Do narrow down your options to the top 2-3 before doing a deep dive.
The “Good, Better, Best” Approach to a 50-Page Menu.
Being faced with dozens of insurance options is a recipe for “analysis paralysis.” The way to break through this is to use a simple, two-step process. First, do a high-level scan and use a few key criteria to narrow the entire, overwhelming universe of options down to just the top two or three contenders. You are creating a “good, better, best” short list. Only then should you do the deep, time-consuming dive into the fine print of those few finalists. It’s the only way to make a rational decision without being completely overwhelmed.
The #1 psychological reason people don’t buy long-term care insurance is that it forces them to confront their own mortality and potential decline.
The “Terror Management Theory” of Financial Planning.
“Terror management theory” is a psychological concept that says that much of our behavior is driven by a deep, primal fear of our own mortality. Long-term care insurance is a product that forces you to stare that mortality, and the potential for a long, slow decline, directly in the face. It is a deeply uncomfortable and frightening thing to contemplate. The #1 reason people procrastinate is that they are engaging in a powerful, subconscious act of self-defense against the terrifying reality of their own aging and death.
I’m just going to say it: The feeling of security is a basic human need, and insurance is one of the most efficient ways to purchase it.
You’re Not Just Buying a Policy; You’re Buying a Feeling.
We often think of insurance in purely financial terms. But its core benefit is deeply psychological. A feeling of safety and security is a foundational human need, right up there with food and shelter on Maslow’s hierarchy. A good insurance plan is one of the most direct and efficient ways to satisfy that need. You are not just buying a legal contract; you are purchasing the tangible, and incredibly valuable, feeling of peace of mind. It is a product that satisfies one of our deepest and most fundamental human cravings.
The reason you trust one insurance mascot over another is the result of millions of dollars in carefully crafted psychological conditioning.
The “Pavlov’s Dog” of the Financial World.
That warm, fuzzy feeling you get when you see a friendly cartoon gecko is not an accident. It is the result of a multi-billion dollar, and scientifically crafted, psychological conditioning campaign. It is the Pavlov’s dog experiment on a massive scale. By repeatedly associating their brand with humor, trust, and friendliness, these companies are creating a powerful, positive, and completely non-rational emotional response in your brain. You are not choosing a company; you are responding to years of carefully orchestrated psychological triggers.
If you’re still getting your insurance advice from a radio host, you’re falling for the “halo effect,” where expertise in one area (broadcasting) is wrongly assumed to extend to another (finance).
The Famous Actor Who Is Suddenly a Medical Expert.
The “halo effect” is a cognitive bias where our positive impression of a person in one area causes us to believe they are an expert in others. It’s the reason we will listen to a famous actor give medical advice. A radio host might be a brilliant and entertaining broadcaster, but that does not make them a qualified financial expert. By falling for the halo effect, you are trusting the advice of a charismatic amateur in a field that requires the deep, nuanced knowledge of a seasoned professional.
The biggest lie is that insurance is just a financial transaction. It’s deeply emotional.
The “Numbers” vs. the “Story.”
The lie is that insurance is a cold, boring, and purely mathematical product. The reality is that it is one of the most deeply emotional financial products in the world. It is not about the numbers; it is about the human story behind the numbers. It is about love, fear, responsibility, and legacy. It is about the promise you are making to your family to protect them from the chaos of the world. A good insurance plan is not just a financial transaction; it is a story you are writing about the people you love.
I wish I knew that my tendency to be a “maximizer” (seeking the absolute perfect option) was preventing me from being a “satisficer” (choosing a great option and moving on).
The Agony of the “Perfect” vs. the Joy of the “Great.”
A “maximizer” is a person who is obsessed with finding the absolute, 100% perfect, best possible option. This search is exhausting, stressful, and often leads to no decision at all. A “satisficer” is a person who does their research, finds a great option that meets all their needs, and then confidently chooses it and moves on. In the world of insurance, it is far better to be a happy satisficer with a great policy than a stressed-out maximizer with a perfect, but non-existent, one.
99% of people make this one mistake: they let the “reciprocity bias” guilt them into buying from an agent who gave them a free cup of coffee and a calendar.
The “Free Gift” That Comes with a Hidden Price Tag.
The “reciprocity bias” is our deep, human instinct to want to give something back when something is given to us. A savvy salesperson knows this. The free cup of coffee, the free lunch, the free calendar—these are not just acts of kindness. They are small, psychological gifts that are designed to make you feel a sense of obligation. This feeling of guilt can then pressure you into buying a policy from them, even if it is not the best one for you. You must learn to separate the gift from the transaction.
This one small action of reframing your premium as a “financial security bill” instead of an “insurance expense” can change your entire mindset.
The “Cost of Doing Business” vs. the “Investment in Your Future.”
Words have power. The word “expense” has a negative, painful connotation. The simple, powerful action of reframing your insurance premium in your mind and your budget can change your entire relationship with it. It is not a random, annoying “expense.” It is your monthly “Financial Security Bill” or your “Peace of Mind Payment.” It is a proactive, empowering, and responsible investment in your own stability and well-being. This one, small mental shift can transform a painful cost into a positive affirmation.
Use the “third-person perspective” trick: ask yourself what advice you would give to a friend in your exact situation.
The “Wise Counselor” Who Lives Inside Your Head.
It is incredibly difficult to be objective about our own problems. We are too close to them, too emotional. The “third-person perspective” trick is a powerful way to unlock your own inner wisdom. You simply imagine that your best friend has come to you with your exact same situation and your exact same set of options. What advice would you give them? The calm, rational, and objective advice you would give to your friend is almost always the exact advice you should be taking for yourself.
Stop letting your political views on healthcare influence your personal decision-making about the health insurance you need today.
The “Ideal World” vs. the “Real World.”
You may have very strong and valid political opinions about how the healthcare system should work. But you do not live in that ideal, imaginary world. You live in the real, messy, and complex system that exists today. Letting your political beliefs about a future, ideal system prevent you from making the best possible decision for your family in the current, real system is a dangerous and irrational mistake. You must separate your political philosophy from your personal, practical, and immediate financial planning needs.
Stop feeling guilty about spending money on insurance. Do feel proud that you’re taking responsibility for your financial future.
The “Burden” vs. the “Badge of Honor.”
Feeling guilty about the money you “waste” on insurance premiums is a sign that you are viewing it as a burden. You need to flip the script. Every single premium payment you make is an act of love, responsibility, and foresight. It is a tangible demonstration that you are a person who takes care of their family and honors their commitments. It is not a burden to be ashamed of; it is a badge of honor to be worn with pride. It is the mark of a responsible and caring adult.
The #1 psychological barrier is the abstract nature of the product. You’re buying a promise, a piece of paper.
The “Invisible” Product That Is Hard to Value.
When you buy a car, you can see it, touch it, and drive it. The product is tangible. The #1 psychological barrier to buying insurance is that the product is completely abstract and invisible. You are handing over real, tangible cash in exchange for a piece of paper with a promise on it. Your brain has a very difficult time assigning a real, tangible value to that abstract promise. The key is to consciously focus on the very real and tangible peace of mind that this “invisible” product provides you with every single day.
I’m just going to say it: It is psychologically easier to pay a small, certain premium than to live with a small, uncertain risk of total financial ruin.
The “Slow, Steady Drip” vs. the “Sudden, Terrifying Flood.”
This is the fundamental psychological trade-off of insurance. The premium is a small, predictable, and annoying “slow drip” from your bank account. A catastrophic, uninsured loss is a sudden, terrifying, and life-altering flood. While our brains hate the certainty of the drip, a rational mind understands that it is an infinitely preferable and psychologically easier state to live in than the constant, low-grade anxiety of knowing that the dam could break at any moment. You are trading a small, known pain for the avoidance of a massive, unknown one.
The reason it feels good to get a claim check is not just the money; it’s the psychological validation that your planning paid off.
The “I Knew It!” Moment of Financial Foresight.
The relief of receiving a large claim check is not just about the money. It is a powerful moment of psychological validation. It is the tangible proof that your planning, your discipline, and your foresight were all worth it. It is the moment where your abstract, invisible product becomes a real, tangible, and powerful force for good in your life. It is the “I knew it!” moment that confirms that you were a smart, responsible person who made a wise decision to protect your family from the inevitable chaos of the world.
If you’re still making decisions based on fear of missing out (FOMO) on a “special deal,” you’re losing your rational judgment.
The “Limited-Time Offer” That Is Almost Never Limited.
“Fear of Missing Out” (FOMO) is a powerful, primal emotion that marketers love to exploit. A “limited-time offer” or a “special enrollment period” is designed to trigger your FOMO and force you into a quick, emotional decision. The reality is that in the insurance world, there are very few truly limited-time deals. A good, rational financial decision is a slow one. You must recognize that FOMO is an emotional trick, and you must have the discipline to step back, take a breath, and engage the logical, analytical part of your brain.
The biggest lie is that insurance is boring. It’s the study of human behavior, risk, and how we cope with uncertainty.
The “World’s Most Interesting Math Problem.”
The lie is that insurance is a dry, boring world of numbers and spreadsheets. The reality is that it is a fascinating, multi-trillion dollar industry that is built on the study of human psychology, behavior, and our collective attempts to manage the fundamental uncertainty of life. It is a world of statistics, probabilities, and the deep, philosophical questions of how we value the future. It is not just a boring product; it is one of the most interesting and important social and financial inventions in human history.
I wish I knew that my desire for simplicity often led me to choose inferior, overly simple products.
The “Easy Button” That Leads You Off a Cliff.
Our brains are naturally drawn to simplicity. In a complex and confusing world, an “easy button” is an incredibly attractive offer. But in the world of finance, that easy button is often a trap. An overly simple product with a low premium is often a product that has had all of its most important, and slightly more complex, features stripped out of it. My desire for a simple, easy-to-understand solution often led me to choose a product that was simple because it was weak, not because it was elegant.
99% of people make this one mistake: they fail to update their insurance after a major life event because of “inattentional blindness”—they just don’t see the new risks.
The “Gorilla in the Room” of Your New Life.
“Inattentional blindness” is the famous psychological experiment where you are so focused on counting the basketball passes that you completely fail to see the person in a gorilla suit walking through the middle of the game. A major life event—a marriage, a new baby, a big promotion—is so emotionally overwhelming that we are often blind to the new gorilla in the room: the massive new set of financial risks we have just taken on. We are so focused on the joy of the moment that we are blind to the new need for more life insurance or a higher liability limit.
This one small action of acknowledging your own biases is the first and most important step to becoming a smarter insurance consumer.
The “Mirror” That Reveals Your Own Flaws.
You cannot fix a problem that you do not know you have. The single most powerful action you can take to make better financial decisions is to simply look in the mirror and acknowledge that you are not a perfectly rational being. You are subject to a host of powerful, and often invisible, psychological biases that are constantly trying to lead you astray. This one, simple act of intellectual humility is the foundation upon which all other good decisions are built. It is the moment you realize that you need a map because you are lost.