Use Insurance Tools to Eliminate Zero-Sum Risks

Insurance companies have long mastered pooling risk—life insurance for dying too soon, annuities for living too long. Yet most individuals still self-insure by squirreling away massive sums, fearing they’ll outlive their savings. Behavioral economists call the puzzle of low annuity uptake the “annuity puzzle,” despite these products offering steady, guaranteed income and freeing savers to spend boldly.

Income annuities act like reverse life insurance: you hand over a lump sum and receive a lifelong stream of payouts. Research shows that, after fees, many annuities outperform the 4% withdrawal rule commonly touted by planners for retirement. By covering essential living costs in a no-risk bucket, you eliminate the worst-case fear of outliving your money.

Similarly, long-term care insurance—once scorned as expensive—has evolved. Younger buyers (late fifties) often find premiums surprisingly affordable, gaining reassurance against nursing-home uncertainty. Armed with these insurance tools, you can decouple your fear of running out from the desire to live life to the fullest.

Discover which insurance tools let you nail down baseline needs while freeing the rest of your life energy. Talk to a fiduciary adviser about annuities and long-term care—see how little it might cost you compared to carrying a huge cash cushion. Once your downside is locked up, you’re cleared to spend boldly on the upside.