One of the most surprising lessons I have learned during my career in the insurance industry is this:
Many of the financially healthiest people I know are intentionally working toward needing less insurance over time, not more.
That statement can sound contradictory, especially coming from someone who is an EVP of an insurance firm. But the longer I work with individuals, families, and business owners, the more convinced I become that insurance was never designed to be the ultimate financial objective. Insurance was designed as a protective tool to support people as they build wealth.
Insurance plays an incredibly significant role in a healthy financial life. In many cases, it protects families and businesses from losses that would otherwise be devastating. I have seen firsthand how quickly a serious accident, lawsuit, natural disaster, or medical event can permanently alter someone’s future.
That reality should not be minimized.
At the same time, I believe many people misunderstand the true purpose of insurance. Insurance was never intended to protect us from every inconvenience, frustration, or manageable financial setback. Its primary purpose is to cover what would financially devastate us, not inconvenience us.
There is a significant difference between a financial inconvenience and a financial disaster.
A damaged windshield is inconvenient.
A house fire is devastating.
A minor plumbing leak is frustrating.
A major liability lawsuit can change the trajectory of a family’s financial future forever.
Financial wisdom often comes down to understanding the difference between those two categories and making intentional decisions accordingly.
One of the clearest examples of this principle is how financially mature people think about deductibles.
Most people instinctively want the lowest deductible possible because lower deductibles feel safer emotionally. There is comfort in knowing the insurance company will step in quickly for even relatively small losses.
However, financially disciplined individuals often begin to view deductibles through a different lens.
A deductible represents the portion of risk someone is willing and financially capable of carrying personally.
When a person raises a deductible, they are not necessarily becoming reckless. In many cases, they acknowledge growth. They recognize that they now possess enough financial margin, savings, and stability to responsibly absorb smaller setbacks without those events becoming crises.
That shift matters.
Over time, healthy financial habits create resilience. Emergency savings increase. Debt decreases. Income becomes more stable. Financial discipline improves. As a result, smaller disruptions lose their ability to derail a person’s life.
That does not eliminate the need for insurance. It simply changes the role insurance plays.
The financially strongest people I know still protect themselves aggressively against catastrophic loss. In fact, many carry substantial liability protection because they understand how destructive large claims can be. They recognize the importance of protecting assets, businesses, income, and future opportunities from risks that could truly threaten long-term financial security.
At the same time, they often choose not to insure every small or predictable expense.
Why?
Because they understand an important financial principle: Insurance becomes increasingly inefficient when it is used to protect against losses that someone could cover themselves.
Again, the purpose of insurance is to cover what would financially devastate you, not inconvenience you. That distinction is becoming increasingly important in a culture where financial decisions are driven more by fear and emotion than by long-term strategy.
The long-term objective is simple:
Carry what you responsibly can.
Transfer what you cannot.
Continue building a life where fewer things have the power to break you.
Because at the end of the day…Insurance is the tool. Health is the goal.
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