The Statistical Realities of Life and Business

Simply put, when certain risks become statistical, they are not avoidable – they can only be managed – that is why you need risk insurances.

Why do statistics matter in life and Life insurance?

We all understand the growing importance of big data and how we use statistical averages to estimate the risk of a particular event happening. Governments collect census big data every five years to help them better plan for the future needs of the population and hospitals have been using statistical data to help predict how many Australians will need emergency healthcare and how many will need ongoing treatment - and on average, for how long.

Using big data to better predict the future is a necessary part of life.

Preparing for the percentages and still planning for a future

The ability to try and predict a long term future is part of what makes us human and separates us from the rest animal world

• Actuaries have been analyzing data for years but it's only more recently has the general public become more aware of how big data statistics help us all better manage the typical risks of life.
• This could be estimating the possible chance of an adverse weather event occurring, understanding the percentages of expected car accidents each year or knowing what percentage of our population will need emergency health care (or long term cancer care) each year.

All our preparation is based upon understanding the percentages of risks and that's particularly true for the Life Insurance industry and its army of actuaries (the big data boffins) who use very large amounts of statistical health data to understand and predict what percentage of people will face specific health challenges and when.

The problem of predicting the future better

The problem of being able to predict the likelihood of the future for a big percentage of people is that it often forces us to face uncomfortable questions.

• The upside of being able to better predict the future is that we have a better chance of an advanced warning and being better able to prepare for it – so we can try and smooth out the inevitable bumps and be ready for the inevitable challenges we will all face.

And that's true of the Life Insurance industry that specialises in predicting the percentages of certain risks occurring for a range of medical conditions and then offering to provide insurance products that protect against them. (This is known as pooling the risk, and is a worldwide risk management principle).

How we see risks

We understand that for every adult, the future is to a large extent uncertain - and that's uncomfortable to think about.

• When it comes to helping our clients better manage their own personal (and business) risks, we talk about four possible ways to manage risks.

We see risks as either:

1. Avoidable - where possible avoid serious risks
2. Acceptable - risks that are usually not that expensive
3. Manageable - risks that are important
4. Transferable - the best way to manage big risks with catastrophic consequences, whether emotional or financial or both.

Pro Insight: The worst risks to face unprepared are those that are statistical – and not personal. This is because they are unavoidable and have to be prepared for and managed. The worst combination of risks is those that are statistical and have the power to bring catastrophic consequences we personally may not have the resources to deal with. These risks are always best transferred to a Life insurance policy to carry for you.

Relax, it's not personal – it's just statistical

Understanding that some risks in life and business are just statistical realities (and not personal), helps remove some of the natural fears and discomfort we all face when thinking about something unknown or unpleasant in the future, and how that could affect our life, business, and family.

• We can't avoid them, they are statistical, it's not personal - they happen to us all.

All we can do is manage them so that if they do happen, we have a backup plan already in place.

Taking an adult look at an outdated approach

We all need to get past the childish notion that merely talking about serious illness, such as Cancer, will in some metaphysical way attract it into our lives.

If this is your firm and fixed belief of how the natural world works and the best way to manage life's big risks is simply to avoid talking about them - we're probably not the type of Financial Adviser you'd feel comfortable doing business with anyway.

But if you're the type of person who accepts that life and business are naturally risky, that there are risks we all have to be prepared to manage (after all, that's why we wear seat belts, look both ways before crossing the road and check the use-by-dates on perishable foods and lock our doors at night) then we'd like to get to know you better.

The worst risks we all face - are not avoidable so they have to be managed. The biggest risks we all face are those that have both emotional and financial consequences - because we never do our best work during an emotional and financial catastrophe.

^{Source: Life Underwriting Guidelines}

So where to now?

Here's the first simple mental shortcut (or unconscious bias) that you'll need to get past as you start to plan for a more secure future

'The issue is not the cost, it's that you don't think these things will ever happen to you'

Remember, the biggest risks are those that have both emotional and financial consequences - because we never do our best work during an emotional and financial catastrophe.

How we can help

Understanding the statistical realities of life and business is a core function of living a bigger life and protecting your business and your family, from the business.

Contact us for a confidential chat about your needs.

• the numbers of life
• the numbers of business

Why choose Sapience Financial as your Risk Insurance Adviser?

Simple: You're better off with good advice from a human.

Sapience Financial specialise in understanding and managing the key people-based-risks that small business owners and their families face.

Insurance products are complex legal documents and difficult to understand without guidance

Most Australians looking for risk advice find Life insurance websites confusing and not effective at helping them decide on what they may need and why - with often the only help offered is a form for requesting a sample quote on price.

Although many online shoppers can quickly scan product comparison sites while engaging in some DIY advice, the complexity of different life insurance related products doesn't naturally lend itself to this kind of one-way interaction.

In fact, one government regulator, has cautioned consumers against online shopping for insurance, due to the risk of fraud and the need to have a clear understanding of what they are buying.

No two Life insurance policies are the same and not two clients' needs and circumstances are the same

Each life insurance contract has a particular and different focus.  It takes a skilled professional adviser to understand the differences in the fine print.

• Simply put, some policies are better at providing more extensive cover for particular types of occupations, pastimes, and sports – even types of existing health conditions.
• Some policies have a specific cover that's better for female health issues, others for male-specific health issues — to know the degree of difference is our job.

Life and business problems usually overlap, so should the solutions

It doesn't take long before you realise that life, love, and business never quite work out the way we expect.

Much of life is about managing competing priorities and weighing up the cost of overlapping risks and responsibilities. Ultimately there is no perfect answer for all problems but there is a way to protect and provide that maximises your chances of a happier more predictable life.

We believe secure people live bigger lives.

It's all about a Strategy to help you be better off with good advice

In today's connected world, we don't lack an abundance of information. There is so much information we first have to decide what's relevant to us (and what is not), what's relevant today, and what's best left for tomorrow. Even if you have all the time in the world, sifting through the information is not the same as benefiting from the expertise of a professional's wisdom.

It's all about Support when you need to claim on your insurance policy

Focusing on price alone means you miss understanding the true value. People regularly need to claim on their personal insurance policies.  In 2019, the life insurance industry paid out more than $12 Billion (yes that's a 'B') to around 100,000 Australians and their families.

Insurance claims are usually accompanied by times of significant stress and gift. Having your own financial adviser as your personal advocate at such times is a significant support when you'll need it the most.

Choose Sapience Financial as your Small Business and Family's risk advisor

We're always here to talk. What you get from talking with a real-life person is not a conceptual framework or academic theory, but an experienced point of view integrated into a personality. At Sapience, we're all about The How.

4 Good Reasons to Work with the team behind Sapience Financial

How we can help

Working with a professional advisor can help you accelerate your understanding and capacities significantly. Facing the complexity of life, love and business and developing a backup plan, just in case, can reduce the inevitable anxiety and 'noise' of modern life and business and striving to get ahead.

Contact us for a confidential chat about your needs.

[ And for the technically minded - we work with all Life Insurance Providers in Australia]. This means our clients can have the broadest possible solution horizon because we have access to every Life insurance company in Australia - not just the top 5, or 'the biggest' or however smaller advice practices need to spin it.

• Get Life Confident
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