Goals-Based Portfolio Theory

CHAPTER 6Insurance Through a Goals‐Based Lens

“All good things arrive unto them that wait and who don't die in the meantime.”

—Mark Twain

Insurance—and the various insurance products that saturate the marketplace—tend to have either a loyal following or are met with disdain by practitioners. Annuities, as a word, can evoke bristling responses from clients and practitioners alike, while others would sing their praises from the highest mountain if they could. I have myself been pitched countless clever “off label” uses of life insurance, from “it is like owning your own bank” to “it is a rich‐man's Roth IRA.” And then there is the mundane: life insurance, car insurance, homeowners insurance, even crop insurance.

Insurance is so broad a topic that there is little hope we could do it proper justice in a single chapter. Even so, this is a book about achieving goals, and insurance products very often have a role to play in aiding in their achievement—or at least preventing their failure. Unfortunately, the literature on insurance through a goals‐based lens is very limited (this would be a wonderful topic for anyone looking for a research subject), and it is not my intent to fill such a large gap in one sitting. Rather, I would like to view this chapter as a bit of a signpost, both pointing a way for future research as well as offering some direction to practitioners who would like a framework for thinking about the problem (and sifting through some of the nonsense). If all of that ...