THE NATURE OF INSURANCE-THE 'POOLING' OF RISKS

A “pool” is a collection of money contributed by interested parties for a particular purpose. With a football pool, for example, the participants put a contribution into a central pool of money. They then try to guess something quite extraordinary, for example which eight teams will draw their matches next Sunday. Very often nobody guesses correctly, and the one who guesses nearest to the correct answer collects all the money in the pool, apart from the portions taken by the Government for taxation and by the management for the expenses of running the pool. A football pool therefore has the basic plan as explained above.

The difference with insurance is that it is not the lucky person who takes all, but the unlucky person or persons who take enough to enable them to recover from the unkind blow that fate has dealt them. This is much better than a football pool. A football pool is a gamble; a surrender of part of our assets in the wild hope that good fortune will smile upon us. Insurance is a much wiser and more sensible activity. It is a surrender of a tiny portion of our assets in order that a pool of money shall be created. From this pool, if we suffer the risk insured against, compensation will be paid to restore us to our previous good condition. We shall never win a fortune, we all know this is unlikely anyway, but we shall be sure that whatever standard of living we have achieved will continue for years to come.

With life assurance the man who insures his own life so that his wife and children are provided for should he die, is not gambling upon his death. He does not wish to win the money in the pool; he hope to lead a normal healthy life, and the feeling of security he gets from knowing his family is covered by a Family Protection Policy will help him enjoy life all the more.