They were both in their early thirties, living in Ballarat, tidy house on a quiet street. Over coffee one winter, they made a decision most people consider unthinkable: cancel every optional policy they held, and see what three years without insurance would do to their money.
They tracked every dollar in a shared spreadsheet. They set rules, and they kept score. When they finally showed the results to their financial adviser, he stared at the page and simply exhaled. “I’m not often short of words,” he said, “but this is a very unusual outcome.”
The math that made them brave
In year one, Jess and Tom listed their recurring premiums: private health, life and TPD, income protection, home and contents, two cars, and a small pet policy. Total, about AUD 12,100.
They cancelled the lot — aside from the compulsory injury cover tied to car registration — and siphoned every former premium into their offset account. Their mortgage rate hovered around 6%, so every dollar “saved” from insurance also reduced interest.
Over three years, that added up to roughly AUD 36,300 in skipped premiums, plus about AUD 5,700 in interest they didn’t pay because of the swelling offset balance. The cell at the bottom of the spreadsheet read 42,000 — their self-insurance “dividend.”
“We weren’t trying to be reckless,” Jess said. “We wanted to test whether our biggest risk was actually monthly drag.”
The risks they chose to carry
They carried genuine exposure. No policy would have swooped in if something went wrong. They knew the specific ways it could all backfire:
- A house fire or major theft could erase years of careful saving. An at‑fault car crash could mean full repairs out of pocket, plus potential third‑party damage. A sudden illness could force time off work without income support. Re‑entering private health later could invite waiting periods and potential lifetime loading on future premiums. And without life or TPD, a catastrophic event could destabilize the whole household.
Tom shrugged when asked about fear. “We weren’t fearless; we were calculating. We priced the biggest disasters and asked if we could survive them.”
How they tried to make luck
They didn’t rely on luck alone. They built a $25,000 emergency buffer in month three, ring‑fenced from travel and impulse spend. They drove less, and when they did, they drove slower. The cars were older, fully owned, cheap to fix.
At home, they upgraded locks and installed sensors. They serviced the heater before winter. They trimmed trees and cleared gutters before storms. Small outlays, big coverage in their minds.
Health-wise, they leaned on Medicare and paid attention to the boring stuff: stretching, dental checkups, meal prepping, early nights. “We accepted that if we needed a private hospital, we’d pay cash or wait our turn,” Jess said.
They also wrote down red lines: if either lost a job, was diagnosed with anything major, or if the offset fell under a set threshold, they’d reinstate key policies within a week.
The adviser’s stunned silence
When their adviser finally saw the numbers, he blinked. “You saved forty‑two grand while the dice never rolled against you. That’s hard to argue with,” he admitted.
But he also winced. “This is survivorship bias in the flesh. One storm, one driver texting at the wrong time, and your graph would look very different.” He underlined the line about future private health loading and potential waiting periods. He circled “loss of income” three times.
Jess nodded. “We knew there was no safety net we didn’t build ourselves.”
What their experiment teaches
This wasn’t a manifesto against insurance. It was a narrow test run that happened to end in their favor. The key was context: two adults, no kids, stable jobs, modest assets, and a thick emergency fund.
Where could a similar approach make any sense? Possibly for people with:
- High savings discipline, low debt, older paid‑off assets, stable income, and comfort with public systems like Medicare and the courts, plus a realistic grasp of tail‑risk pain.
Where is it almost certainly a bad idea? Households with dependents, large mortgages, specialized incomes, fragile health, or any low tolerance for catastrophic loss. For many, targeted cover — say, home and income protection with higher excesses — gets you 80% of the benefit with less ruin risk.
Their story also hints at a middle path. Rather than cancel everything, raise deductibles to cut premiums. Bundle where it’s actually cheaper. Insure what you can’t afford to replace, self‑insure what you can comfortably absorb. Park the premium savings in an offset or high‑yield account and track it like a hawk.
The quiet after three years
On the final day of year three, they didn’t celebrate so much as exhale. The spreadsheet was tidy, the offset fatter, the roof still on, and the cars still running. “We got lucky,” Tom said. “But we also got very deliberate.”
The adviser closed the laptop and chose his words carefully. “You won the coin toss this time. If you keep playing, the house eventually collects.”
They smiled, because they already had a plan: reinstate a couple of core policies, keep the emergency fund intact, and never outsource their understanding of risk again.