Insurance and the "Peace of Mind" Effect

November 11, 2019

Insurance can be kind of a bore to talk about. However, it is a crucial part of our life. Not only is health insurance, for example, important in the event of unexpected health issues and preventative care, but simply having health insurance can give people “peace of mind.” Not just in a figurative sense, but literally. One study found that having health insurance may reduce stress and cortisol levels. Insurance is not just useful in the event of accident or injury, it can also reduce anxiety about these feared events through knowing that you are insured. The "Peace of Mind" effect that insurance offers can apply to all forms of insurance—like auto or life—that help reduce anxiety about what could happen in the future.

 

Researchers at the University of Princeton believe that “stress is strongly associated with environmental uncertainty and volatility." If stress and anxiety are related to uncertainty, then insurance is a sensible way of mitigating stress by offering a degree of predictability. For example, deductibles, out-of-pocket maximums and plan limits on most health and auto insurance plans aim to protect policy holders from the exorbitant costs associated with significant events, such as major medical operations or big accidents.

 

In addition, a study of individuals in Oregon found that having health insurance was linked to a 30% reduction in depression. Like anxiety, depression can be related to worry about future events and whether things will turn out okay. The more prepared someone is for unpredictable events, the more hopeful they might be. 

 

If lower anxiety and depression isn't enough, research also indicates that those who are insured sleep significantly longer than those who are not. The mechanism may again be the Peace of Mind effect conferred by insurance plans, since restlessness is often related to anxiety about future events. If melatonin is not doing the trick, maybe the answer is a more robust insurance policy. 

 

Insurance, as boring as it sometimes seems, addresses a deep psychological need. It wards off stress associated with unpredictable, potentially cataclysmic events such as floods, hurricanes, earthquakes and fires, as well as injuries, accidents, and health issues that almost inevitably arise in our lives. These events can be difficult enough at face-value, but the life-altering impact that they have can often be too much to deal with alone. While insurance cannot protect us from these types of events, it can do a lot to help if they happen. 

 

For example, the Great Fire of London in 1666—which destroyed over 13,000 houses—led to the creation of insurance offices tasked with protecting properties from similar catastrophes. The spirit of insurance was to help alleviate the burden that major events can put on one person. But insurance has been around for thousands of years. It began with agreements that if an accident befalls an individual or family, the community would step in and help them. If property was destroyed by a fire, for example, neighbors would assist them in the rebuilding process.

 

Insurance today is largely corporatized and removed from the communal spirit that originally inspired it, but A and H Insurance has not forgotten what insurance is supposed to be about: protecting ourselves and our loved ones from risks, and knowing that we're stronger as a community than we are on our own. 

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