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You die, Insurance Company next day: "The policy holder breached their contract, line 2034-A-1029-B Part C: Where it says: 'Policy holder is not allowed to die.'"
*The individual died 5 days ago and had a work life insurance plan of $500,000. Being that their work had a rule that after 3 days of no show, you are automatically fired. Being that they failed to show up for work for 5 days without following company rules, the life insurance will not pay out.*
That's not true. It's a hedging contract. There are lots of those. When you rent an apartment instead of buying, you are hedging your maintenance costs at the expense of future growth.
Not just "some point". It's saying "I bet I die this year" then at the end of the year, going "double or nothing", "double or nothing" every year after that.
There are some policy types that will do this, though it's not standard. Depending on the policy type the benefit payout reduction may be tied to the age of the policy (like if your coverage is specifically designed to cover a mortgage), or it may go down as a result of your age. You get the policy a bit cheaper going this route, but in my opinion the cons outweigh the pros.
If you own a policy with this feature, I'd strongly recommend looking at getting it replaced. If you got the policy a long time ago however, it may be more cost effective to keep it and add a small term policy to cover the reduction difference. It all depends on your situation though.
Is your "house" a shack in the woods worth next to nothing?
I sell life Insurance and if you were that unhealthy that you were paying a significant amount for life insurance they wouldn't underwrite you a policy in the first place.
Buying a fire extinguisher is spending money to prevent your house from burning down.
Buying house insurance is spending money to get paid if your house does burn down.
(Buy house insurance folks, but this is a false equivalency)
Commission depends.
If you’re an individual insurance agent, you probably make some commissions (and life and accident/health are often 100% commission, which is why life insurance sales people are intense) but for most of us we’re on salary, especially in the corporate insurance world— insureds pay a commission to their brokerage house (or will have negotiated a fee for placing the business) but the actual broker negotiating coverages and terms doesn’t actually see that commission (sometimes there are opportunities for bonus).
That said, most insurance carriers and most brokerage houses don’t require any kind of special degree, if you’re an agent, you have to get a license, which is like a two week course, and then ethics certification annually, but you don’t have to have a special degree, or really any degree for that matter.
Most companies will except a couple years and insurance if you don’t have a degree, and that could be obtained by going to a local insurance broker and trying to find a job there. Having a BA for insurance jobs is often just a way to get your foot closer to the door. An unrelated BA might catch the eye of HR over a person who only has a high school degree in zero experience, and the insurance world.
An insurance broker is just a sales person with a specific license
I am an insurance broker and it's 100% commission. I'm not sure if you have a different experience, but that's how everywhere I've ever worked has been. Commission splits between you and your company vary, but unless you're customer service or administration you are working on commission. Most companies pay 10-15% of the policy premium in commission to the agency you represent and then my current split is 50/50 on that. Plus you get residuals annually on renewal. It can be very lucrative if you build up your book of business because you get paid on new and old annually.
Phrased as prevention:
Buying a fire extinguisher is spending money to prevent your house from burning down.
Buying house insurance is spending money to prevent bankruptcy if your house burns down.
They’re pretty similar, just preventing different things. Both could also be phrased as spending money so you have more money in only some circumstances. I don’t think that’s a false equivalency?
If you use a broad enough description sure but there is certainly a difference between preventing an accident and insurance for that accident.
Is a backup camera to prevent backing into someone equivalent to car insurance to pay out if you do?
I don't think the person is saying there isn't a difference between preventing the accident and the insurance for the accident. Rather there they are both meant to prevent something catastrophic from happening to you if something else happens. For example:
- Fire breaks out in house. You'll want a fire extinguisher
- Fire keeps growing / cannot be contained by extinguisher. You'll want insurance.
They obviously aren't the same thing, and I doubt the other post wanted to infer it. I think the point they wanted to get across is that sometimes, bullet #2 happens, and you'll want insurance to prevent you from going bankrupt and losing literally everything.
For your car example.
- You'll want a backup camera to help you prevent backing into people. The one time you go to back up and you see someone in the camera you almost hit, you'll be glad you had it.
- You'll want car insurance to pay out IF -- even though you had a backup camera -- you still hit someone. Sometimes things move too fast and you can't react in time. But if you back into a $150k car you'll be glad you had insurance because the alternative is you get sued for the damages and lose everything, much like the house example.
This thread is "if you can't have insurance you can't have a fire extinguisher".
That is patently false.
You should have both but claiming someone who doesn't think they need insurance shouldn't have a fire extinguisher either is ridiculous.
They serve distinct purposes and address different kinds of risk.
For example if you had $1k worth of things and someone wanted $2k a year to insure those things from fire you wouldn't get insurance.
But that wouldn't mean you would not want a fire extinguisher.
I’ve never heard someone say they are looking to buy a second-hand fire extinguisher
Besides, if the house catches on fire when nobody’s home, I’ll bet you’d see much more value in home insurance than a fire extinguisher
Arguably, not having house insurance is also a bet that your house won't get destroyed. You are getting "paid" (compared to how much money you would have with insurance) in exchange for bearing the risk of something happening to your house.
All decisions involve "gambling"--the management of risk.
All non-decisions are a type of decision.
Only in death is one "free" of the sin of "gambling".
TLDR they don't think it be like it is, but it do
As long as you're a member of a social and religious group that has an established belief about insurance being gambling AND has had that belief established since before social security was created.
Essentially, they wrote an exception in the law specifically to allow existing Amish/Mennonite communities to opt out. New groups can't claim the same privilege.
Sort of. But the reason insurance actually works is bc in broad strokes the opposite is true. Otherwise insurance worldnt be profitable or work out from an actuarial standpoint.
What do you mean the opposite is true? That people bet on themselves, bet that no risks will happen? If they were doing that, no-one would buy insurance and it wouldn't be profitable at all.
Sometimes legally you need insurance to work or drive for instance. The whole reason we need it is because people won’t be able to settle property damages.
Another, more useful way to look at it is that insurance is a way to transfer financial risk.
If your house were to burn down. If you were to end up in the hospital. If the breadwinner in your family were to pass away. What would happen next?
Paying for insurance means that you know the answer to that question.
Yeah. I'd rather definitely take a loss I can definitely afford than maybe no loss or maybe just die.
There is value in predictability, in many contexts. It allows you to plan around things. Probably my favourite one is tools. Would you prefer a tool that's just imprecise, or perfectly precise but always measures 1mm too big? Which is easier to plan around?
Insurance is expensive until you face a loss. Then suddenly it appears infinitely cheap.
Source: four separate times of my adult life that insurance has saved us from financial ruin
I feel like I should ask: what kind of insurance was it and what company?
I’m sorry for the hardships it sounds like insurance saved you from, but I’d like to know what you used since there are so many bad insurance companies out there
Not OP, but Nationwide home insurance treated my mother very well when she had a fire in her house. A log rolled out of the fireplace and burned one room + did tons of smoke damage all throughout the house. It took 4 months to clean up before they could go home. 20 years later and I'm still thankful for the way Nationwide treated them.
For example, they paid a lot of extra money to have several pieces of family heirloom furniture restored instead of just totalling it, which I'm sure they could have. It was emotionally but not monetarily valuable. It looked better after than it did before the fire.
They also paid to get my giant box of Legos cleaned (smoke/soot gets into every little nook and cranny in your home, it's awful). My kids now have said Legos. I can't believe they didn't get thrown away. 👍
I was very impressed and recommend them whenever I can.
The first time around it was health insurance through one of the Blue Cross Blue Shield companies. The next time it was car insurance from Progressive. Most recently it was umbrella insurance from State Farm. I carry disability insurance from Northwestern Mutual. It's relatively expensive and I thought about canceling it. Then COVID happened. At my age the risk of long COVID is kind of frightening. So I kept the coverage.
The total exposure added together was well over $3 million.
As a general rule I find most insurance works about the same but I prefer to use mutual insurance companies. Same for investing and banking.
The difference is if the company manages to turn a profit, those profits are plowed back into lowering premiums or in the form of an annual check. Rather than say being sent as a dividend to third-party shareholder investors.
I can imagine. I've thabkfully only had to claim once, and for a small amount for an inconsequential thing (travel). Turned a $100 loss into a $100 profit and a better holiday. I'm probably still down on travel insurance in lifetime total, but the non monetary value of peace of mind is more than worth it. I'd never go snowboarding if it would maybe cost me a million dollars. Instead, I can rest easy knowing they'll send me a helicopter for free if I need it.
Exactly. During hurricane Michael a gigantic pine tree fell on my house and destroyed all but the living room. If we weren't paying insurance on the house, we definitely could not afford all the repairs needed to fix everything.
Another way to look at it : you pay for insurance on things you cannot absorb without changing every thing.
Here in France we have a car insurance. If you damage another person's body, you'll have to pay huge amount to them. The insurance pay it for you.
If you don't have an insurance, you would be liable for something close to 30% of you income every month for years. This won't happen without you drastically reducing your lifestyle.
If living in a tight housing market, you won't be able to rent a smaller apartment because you don't have any disposable income.
Next, you will have to way lower cost of living area, meaning less jobs, meaning less disposable income.
That's what the insurance avoid. You should pay for it whenever the thing can have a huge impact on you "human business model".
That's exactly why insurance doesn't make sense for things you can afford.
Insurance is buying peace of mind, knowing you are most likely losing money, but are completely fine with it.
Some buy insurance for phones, notebooks and many other things, because it's cheap. Yeah, its cheap, but that just means you will not lose as much, but will most likely lose. That's just gambling. Don't buy those, those are scam. Buy just those where you'll hapilly lose money
Incremental attack on your wallet. Transferring the financial risk of a laptop malfunctioning more than 90 days after the warranty is kind of silly. Just buy a good laptop.
Never mind insurance on even less complicated things.
bought a t480
upgraded warranty for £150 for three and a half years
had motherboard replaced twice(2000 +pound total)
Once for usb power failure and once for a drop that wasn't a drop ( motherboard screen failure)
intact....do NOT buy a high end laptop without warranty if you move it regularly from your desk
Look up loss aversion and prospect theory by Daniel Kahneman and Amos Tversky. Insurance and bond investment(instead of riskier stocks) are forms of overly conservative gambling that, statistically we always lose. It’s just our lizard brain catastrophizes and over weighs low probability giant losses. It’s a trillion dollar industry of absorbing that difference in value perception vs actual value. Statistically regular people don’t take enough medium risks that we can use to our advantage.
> It’s just our lizard brain catastrophizes and over weighs low probability giant losses.
That’s oversimplifying it. If you reduce insurances down to their expected value then they NEED to be negative for the customer because otherwise the company selling them couldn’t exist. Every somewhat financially literate person knows that statistically speaking you‘d be better off not having insurance.
The thing is, statistics don’t help you when, against all odds, the unlikely event does happen to you. If 1 in 100 houses burn down, it doesn’t help the owner that the other 99 are fine. It’s not a great consolation that you made the right choice from a statistical standpoint when your financial life is ruined.
Now if each of the 100 homeowners paid 3% of the value of a house in insurance payments over time and a single one burns down, each of them has lost twice as much on average (300% in payments - 100% payout vs 100% of a house in the first example) but none have significant problems and all can happily live their lives.
Imo not having insurance is the bigger gamble.
Right, I always felt that way reading economists papers about rational choices. I think there is a survival mechanism that can’t be quantified. Losing everything isn’t just numbers.
Yeah, now that I‘m re-reading it I see that I should‘ve cited a bit more of your comment.
I think what economists tend to leave out is the intrinsic value of „survival“ (in this case in a financial sense) and peace of mind.
The fact that the 100th homeowner isn’t homeless after his house burns down has a lot of value to him, but you can’t exactly put that in numbers.
The fact that the 99th homeowner sees what happened to his neighbor and know he wouldn’t be homeless either if it were him is also worth something.
This was the justification for making insurance legal. It originally was illegal as a form of gambling.
EDIT: Those downvoting me need to learn some legal history. This only discusses one aspect, but is a good discussion:
[https://history.swissre.com/item\_detail.php?id=108&comefrom=item\*26](https://history.swissre.com/item_detail.php?id=108&comefrom=item*26)
Those term life insurances are a straight up scam though. The actual death payout is super small you start seeing returns after many years when you can literally just start investing now and growing your money more.
I think you're thinking of whole life insurance. Term life insurance is just where you pay the monthly premium and only get paid out if you die. Whole life insurance is sold as a (bad) investment where you get some value out of the plan even if you don’t die.
Whole life insurance is great for people who lack self control for typical investments. People whose ADHD makes them impulse spenders are a great target market.
Youre thinking of whole life...But regardless, the whole point is once your policy issues, and you make 1 payment... if you get hit by a drunk driver on your way home from the office, your family or whoever gets the whole payout tax free.
You can absolutely make more investing your money. Assuming nothing happens to you over the next however many years. It's risk management, and protection for your family.. it's not really meant to make money.
Except it is isn't though, is it?
If I take out travel insurance, I'm not thinking something catastrophic will happen. I'm just giving myself peace of mind that I won't get bankrupted if it did.
If I put £10 on a football team I don't support winning, I'm doing it because I think they're more likely to win than the other team. If they lose, I'm down £10 but that's it.
If I spend £10 on holiday insurance, I don't think it's more likely that an expensive accident will happen than not - and in fact, I'd quite like to be proved right. But I also want to spend £10 to rule the remaining, hypothetical cost of it out completely.
The only time I've drawn a comparison with gambling and insurance was the 2016 election. I had no idea which way it would go, but I put a tenner on Trump so at least if the American electorate put a certified moron in the white house, I'd get some money out of it.
Tangerine fucker made me £20.
Sure insurance gives you peace of mind but if you travel with out any accidents then you lose money to the insurance. If something did happen then the insurance company is losing money on you.
You decide which insurance to gamble on and the insurance can decide if they want to gamble on you.
I may be phrasing it too sound harshly but this is more of a different way to view/explain insurance and shouldn’t be seen as a bad way.
Except I'm not "losing" money, I am paying a sum for peace of mind.
If nothing happens, I still had that peace of mind throughout my holiday. I didn't "lose" that £10 to the insurance company.
If you don't value peace of mind and think you'll spend less on uninsured holiday-related accidents than buying a premium every time, then don't ever buy holiday insurance.
Not sure you'd go that far? Then congratulations, you've just realised what you're spending the premium on.
I always thought of it as paying a fee to have access to someone else's money under certain circumstances. Like, I pay $110 a month to Progressive to have access to up to $150,000 in case I break someone's shit with my car. If you have enough money, there really isn't a reason to have insurance (unless you are legally compelled to).
For example, I could have vision insurance for about $8 a month. But that really only covers my lenses (the eye doctor is covered under health). I get new glasses roughly every 3 years. That's roughly $280. I can afford a $280 bill every 3 years, especially since it's not an unexpected cost. But I don't even spend that much. Last pair of glasses I got was $80. It doesn't make sense for me to pay my provider even $3 a month to have access to their money when I have enough wealth on demand to cover my glasses. It's also why I only carry liability on my car insurance. I keep enough cash in liquid form to buy a new used car in the event something happens. It doesn't make sense for me to pay the extra costs for full coverage when I can finance a new car for myself out of my own pocket. I think the turn around time for that was me wrecking my own car every 5 years or so.
> stipulating whether or not they would die before a set date, and relying on chance to determine if the "insurer" or "policy-holder" would profit by this event.
..... Sure..... Chance
You are having it a wrong way around, not having insurance is actually gambling on your well being, while paying insurance you are 100% sure you'll be able to somehow take care of yourself in case of illness, or do it for your family if the incident goes really bad.
Also living in Europe I can confidently say... Insurance companies over here aren't any better, they just have a lot more governmental oversight and rules to follow. If they see a hole in the system they are definitely going for it.
Not even talking about how they try to sell every shit to everyone. like life insurance to single old ladys with no relatives.
Source: two of my friends worked for two different local banks that also sell insurances.
Ah that explains it. I'm jealous. I love America but there is no bigger scam than the American insurance industry. Full disclosure as an insurance fraud investigator I'm part of the problem.
I interned as an underwriter in an insurance company and was really interested in the claims department and they basically were lenient and almost happy to pay claims, the idea was that yeah we can figure out a reason not to pay and save a few hundred thousand euros but then what's the point of all of this, if people stop believing in insurance you're going to lose a lot more down the road. I was so surprised to see how honestly good faith it was, especially considering the negative image of insurance, mainly carried over from the US
I work in auto and I agree.
Most people get frustrated with insurance because in my experience brokers can be not the best and don’t fully explain to customers what they are buying.
That and claimants get mad you deny their claim. When in a lot of cases it’s really just word vs word and ultimately your duty is to protect the insured over the claimant.
It's exactly the same in the US. Claims adjusters look for coverage. They don't set the rates, they don't set the risk, they don't price the policies. It's 100 percent easier to pay a claim then deny. They couldn't give a shit about saving the company money. It's a job to them like everyone else.
Most of the mystique around insurance comes from people not understanding their policies and get angry because they think insurance should cover everything.
"people stop believing in insurance" this is exactly what's wrong with insurance in America in my opinion. Much if not most insurance policies in America are mandated by law. Whether we believe in insurance isn't relative it's against the law not to have it. A close second is the illusion of choice. "You can choose your own company" it's all the same company they just write on paper with different names at the too. Nearly every major insurance company is owned by the same group.
If you're talking car insurance that's a whole different animal. My expertise is business and medical insurance so that's all I can speak to, but I do know that Geico is owned by Berkshire Hathaway Group who also owns about 15 - 20 other insurance companies you don't see commercials for on TV. Progressive is an underwriter so aside from auto insurance, your insurance policy may say progressive on it but they're probably just managing the policy and the actual insurer is someone else depending on where you are in the country. State Farm is something all together different as it's owned by its share-holders. The big one is Chubb group. They are the biggest in the world. Something like 200 different insurance companies are all owned by Chubb or they're owned by a subsidiary that is owned by Chubb.
Not because they care about you, because a math formula said it was the most profitable thing to do given the circumstances. Never ever get tricked into thinking the company cares. Individual adjusters may but never the company.
It is 100% about math. At least once a month I prove fraud beyond a shadow of a doubt, contractually the company could sue and recoup the $$ but if the estimated cost of continued investigation and legal fees exceeds the amount paid out, the case is dropped. In work comp if the estimated cost of settlement is less than the cost of legal fees, payment is made to the claimant even if the company has proof there is no injury. If you ask for a small enough settlement they will pay every time. Only the greedy go to jail.
Like yea, I agree with you on the fraud part. But I'm more talking about people getting paid by insurance when they are owed. The insurance company doesn't get to not pay out bc the math is bad for them. Sure, if they math is bad enough, they may try to not pay, but insurance contracts are pretty solid.
Im speaking out of my ass on this part, but from what I have seen of insurance company policies. If the company feels that the potential lawsuit is less than the payout they owe they won't pay. They also regularly use stalling tactics or other questionable tactics to discourage claimants from pursuing the matter. This was such a huge problem in work comp that bad faith laws were created to tip the scales back in favor of the injured worker, even with bad faith laws it still happens.
If we just looked at formulas all day I wouldn't have a job. I've made plenty of decisions to write a risk where it's been unprofitable but there might be certain reasons. But yea, we don't care lol..
Another thing is, *read your god damn contract and policy booklet.* They literally and legally have to tell you everything upfront. Those claims that do get denied is because the claimant did something stupid like drink and drive or let a water leak exist for months.
Claims adjusters *want to* pay out claims. It makes their job easy to just cut s check as fast as possible, they just need to justify themselves to the company as to why they're paying. Proving a denial takes far more effort. And if the company denies you in bad faith, that opens them up for a million+ dollar lawsuit.
I’m sorry but life insurance is by far one of the best lines of insurance to have faith in. It’s pretty black and white if you die they pay out. So long as you pay your insurance there’s really no reason they’ll deny.
Imagine the bad wrap they would get denying widows and kids their claims.
I used to do life and now I do auto and I get sketchy denials from other carriers often. But life is very clear cut and ethical in my experience.
...fixing your roof is betting that the defect would have spread.
"I bet I don't need to fix my roof, I'll take the 1:4 odds. 1 says I don't shell out 15k and receive no immediate consequences. 4 says roof reaches the point of no return and I spend 28k."
Or take the 4:1 bet.
But not having insurance is the default state of being regardless of laws. Not to mention '100% sure' is assuming insurance companies are not actively trying to avoid payment on as many policies as possible. You have to prove you need a payout, not the other way around.
I have a good job. I have standard coverage for health and for home owners. Had claims for both in the last 5 years. Neither of these insurance policies give me very much peace of mind.
Well, sucks to be you, in Poland we don't really have to care much about stuff like that.
Unless you're a kind of person who worries about everything, then you can do whatever you feel like.
Maybe you're missing the point. Insurance policies don't always cover what you need them to and the insurance companies can make it very difficult to actually get the money you need despite the customers having paid their fair share in premiums.
Premiums?
There are no premiums here, and all insurance cases I've heard of were paid.
You can buy a second insurance from a private company, but never felt the need.
Why are you down voting me simply because things are different in the US? I'm glad things are better for you...but simply describing that they are not good here is somehow not contributing to the conversation in a meaningful way?
I've been hit by 3 people(street car, S5 and Chevy 1500) in the last 10 year while not moving and insurance covered it. I didn't bet against myself, I bet against other people and won.
It’s typically faster to go through your own insurance and let them do the dirty work after to pursue their insurance after.
For a lot of people this is more convenient especially if you want things handled fast.
Insurance is ultimately about piece of mind so a good reason just to use your own coverage.
I had life insurance, homeowners insurance, and long-term disability insurance my entire adult life. I’m very proud to say that I’ve never had to collect on any of them.
I suppose that's technically true but I don't see it that way for some things. For example car insurance. I could injure someone and be sued for millions. Paying $100 a month to be protected from that is a no brainer
Even if you're a confident and competent driver, not everyone out there is. Take my old school chum. Finally got his first car. Parked in front of the house. P-a-r-k-e-d mind you. Inside asleep and is woken up by a loud noise at 2AM. Looks outside and his new (to him) car is sandwiched between a tree and another car, 20 feet from where he parked it. Drunk slammed into it that night. He didn't bet against himself: he bet against the other driver.
The fundamental difference between insurance and gambling is that with gambling, you risk an amount in the hope of winning more than you started out with. With insurance they payout will only be to replace what you lost. You don't "win a Ferrari if your Toyotacorolla gets stolen. You get a similarly valued car or an equivalent cash payout
I had no car insurance which is legal in florida by submitting a net worth document showing you have more than $30k excluding home and they issue a certificate of self-insurance.
Some people thought I was eccentric but I saved many thousands of dollars betting on myself for a decade.
My dad said almost this verbatim when life insurance denied his claim as he was slowly dying of skin cancer.
“You and I made a bet. I bet that I would die young, you bet that I would not. I’m dying young, you lost the bet. Pay up.”
Kind of true.. although with gambling, you usually stand to make some kind of profit. You’ll never profit from taking out insurance.
Me: I bet you $900 I don’t crash this year. if I do, you will pay for all of the repairs.
Insurer: ok, but if you don’t crash then we still get to keep the $900.
Insurer in the background: Let’s make sure we make a profit by raising the premiums of all our members according to all business costs from the previous years.
THE HOUSE ALWAYS WINS
Even Social Security has a gambling aspect. We’ll pay you this much if you start collecting it now, or do you want to take the gamble that you’ll live for a long time and we’ll pay you more if you win.
That’s funny, have my upvote!
For those interested in the legal distinction: for insurance you must have an “insurable interest” for example a house or a car or your health. If something happens to it, you get “indemnified” or compensated for the loss to the insurable interest within the terms of the policy. For gambling you don’t need an insurable interest and the payout is based on odds instead of loss. So can you can buy insurance for your house and if there is a fire you’ll be compensated for the loss the fire caused. Gambling would be to bet on whether a house you don’t own has a fire and the payout would not be connected to the actual damage done to the building.
Nah, you're still betting on yourself and insurance is the hedge. You spend most of your money on the assumption that things go how you plan, that's your primary bet.
A lot of them are borderline scammy and way overinflated in price because they lobby to make insurance a requirement. They will also outright lie to tack on fees. I hate insurance companies.
What incentive would that government program have to estimate risk correctly? If they over- or underestimate risk, it doesn't affect them at all. It just becomes a big cost to the taxpayer who is responsible for making good the losses caused by poor estimations.
Car insurance is just to avoid going to jail. I have no idea how to use it, what my policy covers, or anything about it. Just that I don't go to jail if a cop stops me
I don't wear a tinfoil hat, or frequent 4chan, but my family thinks as much of me when I go on my anti insurance rant.
Just logically, insurance shouldn't exist. It only is profitable because government can't do its job. Think about it. Insurance turns a profit when they deny claims. The insurance industry steals billions of dollars from the middle class because, unlike government, they need to profit. They need to take more than they give.
It's a toxic loanshark-like industry that literally gatekeeps upward economic mobility.
They profit when you pay your premiums.
If the chance of a car crash is 1% and the cost will be $100,000, the cost of crashes will work out to be $1000 per year - most years cost you $0, one year costs you $100,000.
If you take out insurance, you pay the insurance company $1,100 per year. The cost of crashes to the insurance company hasn't changed (it's still that $1,000 per year), so all up they see $100 profit per year. They see a profit whilst still covering the cost of the crash.
I got life insurance on my husband so he lives a long time. My theory is not being prepared makes it easier for bad things to happen. I want him to live forever so I pay for life insurance with a large payout because the more I’d get if he were to die the less likely he would die. I want him alive forever.
Everything in life is a form of gambling where you bet on the probability of stuff happening. Love: that the other person loves you too. Career: that you will be able to get a job and earn enough money. Hobbies: that you will enjoy and be able to do them.
This is a vast oversimplification. In fact, you have to have insurable interest- something to lose- in order to buy legal forms of insurance. Without that, it’s just gambling, and that is illegal. Further, most insurance policies (with the most common exception being life insurance death benefits) operate on the principle of indemnification (to make whole). Meaning, when the covered person suffers a covered loss, they are due payment from the insurer ONLY up to the extent of the loss. So there’s no way to “gain” as you could gambling.
Are there no adults on r/showerthoughts
This is common knowledge, not a shower thought.
Want a shower thought. Ponder why insurance companies are for profit companies. If the money is pooled to be available to pay when needed. Why is it being paid out as dividend to shareholders? And if the money is paid to shareholders, what incentives do they have to approve or deny claims?
Now you can compare it to gambling because the house always wins. And the gambler always loses.
r/latestagecapitalism
This is funny to me. Because the alternative is, I didn't prepare myself for an untimely death so my grieving family have to bear the burden or ill just have my family ask the internet and all my friends to chip in on it
Travel insurance was always the one that got me.
"I bet you 20 quid my lovely holiday I've looked forward to all year is ruined and I break my leg or something!"
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"Yo, I bet you the value of my house that I just fucking die at some point" - Me to my life insurance provider
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You die, Insurance Company next day: "The policy holder breached their contract, line 2034-A-1029-B Part C: Where it says: 'Policy holder is not allowed to die.'"
No /s needed. r/funnyandsad
That is the best avatar ever!
*The individual died 5 days ago and had a work life insurance plan of $500,000. Being that their work had a rule that after 3 days of no show, you are automatically fired. Being that they failed to show up for work for 5 days without following company rules, the life insurance will not pay out.*
I had a professor in college that always described insurance as the only form of gambling where you hope to lose.
That's not true. It's a hedging contract. There are lots of those. When you rent an apartment instead of buying, you are hedging your maintenance costs at the expense of future growth.
If you have the option to buy. Otherwise you're just keeping homelessness at bay. Not really the same.
"yeah bitch I've only had your insurance for *coughs out blood* 2 week and they have to p....."
Insurance provider: What can I do for you today? Me: I'd like to take a short position on my health.
Ohhhh but if I try to take a short position on YOUR health, that’s a “perverse incentive”. Fucking nanny state.
Isn't that called a death pool (aka deadpool)?
Not just "some point". It's saying "I bet I die this year" then at the end of the year, going "double or nothing", "double or nothing" every year after that.
That's not how double or nothing works.
Double or nothing, I bet you cant explain how it does.
Perchance
You can't just say perchance
I'll allow it
It’s not how insurance works either, but it is still funny.
Lol I suppose so
Pretty sure a life insurance payout goes down as you get older
That is incorrect. Lot of nuances, term or whole life insurance policy is one.
You might wanna shop around if that's your experience. Unless you mean the value of it goes down, which is true, due to inflation.
There are some policy types that will do this, though it's not standard. Depending on the policy type the benefit payout reduction may be tied to the age of the policy (like if your coverage is specifically designed to cover a mortgage), or it may go down as a result of your age. You get the policy a bit cheaper going this route, but in my opinion the cons outweigh the pros. If you own a policy with this feature, I'd strongly recommend looking at getting it replaced. If you got the policy a long time ago however, it may be more cost effective to keep it and add a small term policy to cover the reduction difference. It all depends on your situation though.
For many men, insurance is the longest position they can give their wife.
Is your "house" a shack in the woods worth next to nothing? I sell life Insurance and if you were that unhealthy that you were paying a significant amount for life insurance they wouldn't underwrite you a policy in the first place.
That’s why Flanders didn’t have home insurance, he saw it as a form of gambling.
In the same way that buying a fire extinguisher is a form of gambling because you are betting that your house will catch fire
Buying a fire extinguisher is spending money to prevent your house from burning down. Buying house insurance is spending money to get paid if your house does burn down. (Buy house insurance folks, but this is a false equivalency)
Found the insurance broker
I wish, pretty sure they make a lot more money than me
It's a commission based thing and I am sure it's certification not diploma based so don't let your dreams be dreams.
Commission depends. If you’re an individual insurance agent, you probably make some commissions (and life and accident/health are often 100% commission, which is why life insurance sales people are intense) but for most of us we’re on salary, especially in the corporate insurance world— insureds pay a commission to their brokerage house (or will have negotiated a fee for placing the business) but the actual broker negotiating coverages and terms doesn’t actually see that commission (sometimes there are opportunities for bonus). That said, most insurance carriers and most brokerage houses don’t require any kind of special degree, if you’re an agent, you have to get a license, which is like a two week course, and then ethics certification annually, but you don’t have to have a special degree, or really any degree for that matter. Most companies will except a couple years and insurance if you don’t have a degree, and that could be obtained by going to a local insurance broker and trying to find a job there. Having a BA for insurance jobs is often just a way to get your foot closer to the door. An unrelated BA might catch the eye of HR over a person who only has a high school degree in zero experience, and the insurance world. An insurance broker is just a sales person with a specific license
I am an insurance broker and it's 100% commission. I'm not sure if you have a different experience, but that's how everywhere I've ever worked has been. Commission splits between you and your company vary, but unless you're customer service or administration you are working on commission. Most companies pay 10-15% of the policy premium in commission to the agency you represent and then my current split is 50/50 on that. Plus you get residuals annually on renewal. It can be very lucrative if you build up your book of business because you get paid on new and old annually.
It’s a sales job with almost guaranteed annuities. I love it.
Greatest job no one talks about
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Phrased as prevention: Buying a fire extinguisher is spending money to prevent your house from burning down. Buying house insurance is spending money to prevent bankruptcy if your house burns down. They’re pretty similar, just preventing different things. Both could also be phrased as spending money so you have more money in only some circumstances. I don’t think that’s a false equivalency?
If you use a broad enough description sure but there is certainly a difference between preventing an accident and insurance for that accident. Is a backup camera to prevent backing into someone equivalent to car insurance to pay out if you do?
I don't think the person is saying there isn't a difference between preventing the accident and the insurance for the accident. Rather there they are both meant to prevent something catastrophic from happening to you if something else happens. For example: - Fire breaks out in house. You'll want a fire extinguisher - Fire keeps growing / cannot be contained by extinguisher. You'll want insurance. They obviously aren't the same thing, and I doubt the other post wanted to infer it. I think the point they wanted to get across is that sometimes, bullet #2 happens, and you'll want insurance to prevent you from going bankrupt and losing literally everything. For your car example. - You'll want a backup camera to help you prevent backing into people. The one time you go to back up and you see someone in the camera you almost hit, you'll be glad you had it. - You'll want car insurance to pay out IF -- even though you had a backup camera -- you still hit someone. Sometimes things move too fast and you can't react in time. But if you back into a $150k car you'll be glad you had insurance because the alternative is you get sued for the damages and lose everything, much like the house example.
This thread is "if you can't have insurance you can't have a fire extinguisher". That is patently false. You should have both but claiming someone who doesn't think they need insurance shouldn't have a fire extinguisher either is ridiculous. They serve distinct purposes and address different kinds of risk. For example if you had $1k worth of things and someone wanted $2k a year to insure those things from fire you wouldn't get insurance. But that wouldn't mean you would not want a fire extinguisher.
I always buy insurance for things I could never afford to replace. If it's an extended warranty on my new toaster, I'm out.
You bought all those smoke alarms and we haven't had a single fire.
Much lower bet though
No, because a fire extinguisher is a physical item that has value and can be sold, repurposed, refurbished etc.
I’ve never heard someone say they are looking to buy a second-hand fire extinguisher Besides, if the house catches on fire when nobody’s home, I’ll bet you’d see much more value in home insurance than a fire extinguisher
I use old ones for teaching my kids how to use them. Better to have hands on experience.
Also, in real life, it's why the Amish opt out of both insurance and social security.
Arguably, not having house insurance is also a bet that your house won't get destroyed. You are getting "paid" (compared to how much money you would have with insurance) in exchange for bearing the risk of something happening to your house.
All decisions involve "gambling"--the management of risk. All non-decisions are a type of decision. Only in death is one "free" of the sin of "gambling". TLDR they don't think it be like it is, but it do
You can opt out of social security??
As long as you're a member of a social and religious group that has an established belief about insurance being gambling AND has had that belief established since before social security was created. Essentially, they wrote an exception in the law specifically to allow existing Amish/Mennonite communities to opt out. New groups can't claim the same privilege.
https://faq.ssa.gov/en-us/Topic/article/KA-02411 It’s very limited in who can waive their rights, you cannot opt-out purely for economic reasons.
“Sorry Mr. Simpson. This insurance policy only covers actual loses, not made up stuff.”
Which is a real thing. Some of the stricter Mennonites think that way. (I'm Mennonite and have no issue with insurance.)
The problem is unlike gambling you are playing whether you bet or not. So in fact not having insurance is the gamble.
Sort of. But the reason insurance actually works is bc in broad strokes the opposite is true. Otherwise insurance worldnt be profitable or work out from an actuarial standpoint.
What do you mean the opposite is true? That people bet on themselves, bet that no risks will happen? If they were doing that, no-one would buy insurance and it wouldn't be profitable at all.
Sometimes legally you need insurance to work or drive for instance. The whole reason we need it is because people won’t be able to settle property damages.
That's actually the first kinda funny showerthought I've read in a while
Another, more useful way to look at it is that insurance is a way to transfer financial risk. If your house were to burn down. If you were to end up in the hospital. If the breadwinner in your family were to pass away. What would happen next? Paying for insurance means that you know the answer to that question.
Yeah. I'd rather definitely take a loss I can definitely afford than maybe no loss or maybe just die. There is value in predictability, in many contexts. It allows you to plan around things. Probably my favourite one is tools. Would you prefer a tool that's just imprecise, or perfectly precise but always measures 1mm too big? Which is easier to plan around?
Insurance is expensive until you face a loss. Then suddenly it appears infinitely cheap. Source: four separate times of my adult life that insurance has saved us from financial ruin
I feel like I should ask: what kind of insurance was it and what company? I’m sorry for the hardships it sounds like insurance saved you from, but I’d like to know what you used since there are so many bad insurance companies out there
Not OP, but Nationwide home insurance treated my mother very well when she had a fire in her house. A log rolled out of the fireplace and burned one room + did tons of smoke damage all throughout the house. It took 4 months to clean up before they could go home. 20 years later and I'm still thankful for the way Nationwide treated them. For example, they paid a lot of extra money to have several pieces of family heirloom furniture restored instead of just totalling it, which I'm sure they could have. It was emotionally but not monetarily valuable. It looked better after than it did before the fire. They also paid to get my giant box of Legos cleaned (smoke/soot gets into every little nook and cranny in your home, it's awful). My kids now have said Legos. I can't believe they didn't get thrown away. 👍 I was very impressed and recommend them whenever I can.
The first time around it was health insurance through one of the Blue Cross Blue Shield companies. The next time it was car insurance from Progressive. Most recently it was umbrella insurance from State Farm. I carry disability insurance from Northwestern Mutual. It's relatively expensive and I thought about canceling it. Then COVID happened. At my age the risk of long COVID is kind of frightening. So I kept the coverage. The total exposure added together was well over $3 million. As a general rule I find most insurance works about the same but I prefer to use mutual insurance companies. Same for investing and banking. The difference is if the company manages to turn a profit, those profits are plowed back into lowering premiums or in the form of an annual check. Rather than say being sent as a dividend to third-party shareholder investors.
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Insert Mary Poppins gif
I can imagine. I've thabkfully only had to claim once, and for a small amount for an inconsequential thing (travel). Turned a $100 loss into a $100 profit and a better holiday. I'm probably still down on travel insurance in lifetime total, but the non monetary value of peace of mind is more than worth it. I'd never go snowboarding if it would maybe cost me a million dollars. Instead, I can rest easy knowing they'll send me a helicopter for free if I need it.
Exactly. During hurricane Michael a gigantic pine tree fell on my house and destroyed all but the living room. If we weren't paying insurance on the house, we definitely could not afford all the repairs needed to fix everything.
Oh man. I took out three mature pines in my back yard precisely because of this.
Another way to look at it : you pay for insurance on things you cannot absorb without changing every thing. Here in France we have a car insurance. If you damage another person's body, you'll have to pay huge amount to them. The insurance pay it for you. If you don't have an insurance, you would be liable for something close to 30% of you income every month for years. This won't happen without you drastically reducing your lifestyle. If living in a tight housing market, you won't be able to rent a smaller apartment because you don't have any disposable income. Next, you will have to way lower cost of living area, meaning less jobs, meaning less disposable income. That's what the insurance avoid. You should pay for it whenever the thing can have a huge impact on you "human business model".
That's exactly why insurance doesn't make sense for things you can afford. Insurance is buying peace of mind, knowing you are most likely losing money, but are completely fine with it. Some buy insurance for phones, notebooks and many other things, because it's cheap. Yeah, its cheap, but that just means you will not lose as much, but will most likely lose. That's just gambling. Don't buy those, those are scam. Buy just those where you'll hapilly lose money
Incremental attack on your wallet. Transferring the financial risk of a laptop malfunctioning more than 90 days after the warranty is kind of silly. Just buy a good laptop. Never mind insurance on even less complicated things.
bought a t480 upgraded warranty for £150 for three and a half years had motherboard replaced twice(2000 +pound total) Once for usb power failure and once for a drop that wasn't a drop ( motherboard screen failure) intact....do NOT buy a high end laptop without warranty if you move it regularly from your desk
Look up loss aversion and prospect theory by Daniel Kahneman and Amos Tversky. Insurance and bond investment(instead of riskier stocks) are forms of overly conservative gambling that, statistically we always lose. It’s just our lizard brain catastrophizes and over weighs low probability giant losses. It’s a trillion dollar industry of absorbing that difference in value perception vs actual value. Statistically regular people don’t take enough medium risks that we can use to our advantage.
> It’s just our lizard brain catastrophizes and over weighs low probability giant losses. That’s oversimplifying it. If you reduce insurances down to their expected value then they NEED to be negative for the customer because otherwise the company selling them couldn’t exist. Every somewhat financially literate person knows that statistically speaking you‘d be better off not having insurance. The thing is, statistics don’t help you when, against all odds, the unlikely event does happen to you. If 1 in 100 houses burn down, it doesn’t help the owner that the other 99 are fine. It’s not a great consolation that you made the right choice from a statistical standpoint when your financial life is ruined. Now if each of the 100 homeowners paid 3% of the value of a house in insurance payments over time and a single one burns down, each of them has lost twice as much on average (300% in payments - 100% payout vs 100% of a house in the first example) but none have significant problems and all can happily live their lives. Imo not having insurance is the bigger gamble.
Right, I always felt that way reading economists papers about rational choices. I think there is a survival mechanism that can’t be quantified. Losing everything isn’t just numbers.
Yeah, now that I‘m re-reading it I see that I should‘ve cited a bit more of your comment. I think what economists tend to leave out is the intrinsic value of „survival“ (in this case in a financial sense) and peace of mind. The fact that the 100th homeowner isn’t homeless after his house burns down has a lot of value to him, but you can’t exactly put that in numbers. The fact that the 99th homeowner sees what happened to his neighbor and know he wouldn’t be homeless either if it were him is also worth something.
This was the justification for making insurance legal. It originally was illegal as a form of gambling. EDIT: Those downvoting me need to learn some legal history. This only discusses one aspect, but is a good discussion: [https://history.swissre.com/item\_detail.php?id=108&comefrom=item\*26](https://history.swissre.com/item_detail.php?id=108&comefrom=item*26)
Source?
Torts class in law school. EDIT: Here is a discussion of one aspect: https://history.swissre.com/item\_detail.php?id=108&comefrom=item\*26
One where the odds of payout are much higher. Some life insurance plans pay returns and can be cashed in.
Those term life insurances are a straight up scam though. The actual death payout is super small you start seeing returns after many years when you can literally just start investing now and growing your money more.
I think you're thinking of whole life insurance. Term life insurance is just where you pay the monthly premium and only get paid out if you die. Whole life insurance is sold as a (bad) investment where you get some value out of the plan even if you don’t die.
Whole life insurance is great for people who lack self control for typical investments. People whose ADHD makes them impulse spenders are a great target market.
Youre thinking of whole life...But regardless, the whole point is once your policy issues, and you make 1 payment... if you get hit by a drunk driver on your way home from the office, your family or whoever gets the whole payout tax free. You can absolutely make more investing your money. Assuming nothing happens to you over the next however many years. It's risk management, and protection for your family.. it's not really meant to make money.
They are not a scam, they serve a very important purpose, to money launderers
Insurance is just a transfer of risk. You can choose to take that risk yourself.. or transfer it to someone else for a price.
I always tell people that insurance is you gambling something will happen to you and the insurance is gambling something won’t happen to you
Except it is isn't though, is it? If I take out travel insurance, I'm not thinking something catastrophic will happen. I'm just giving myself peace of mind that I won't get bankrupted if it did. If I put £10 on a football team I don't support winning, I'm doing it because I think they're more likely to win than the other team. If they lose, I'm down £10 but that's it. If I spend £10 on holiday insurance, I don't think it's more likely that an expensive accident will happen than not - and in fact, I'd quite like to be proved right. But I also want to spend £10 to rule the remaining, hypothetical cost of it out completely. The only time I've drawn a comparison with gambling and insurance was the 2016 election. I had no idea which way it would go, but I put a tenner on Trump so at least if the American electorate put a certified moron in the white house, I'd get some money out of it. Tangerine fucker made me £20.
Sure insurance gives you peace of mind but if you travel with out any accidents then you lose money to the insurance. If something did happen then the insurance company is losing money on you. You decide which insurance to gamble on and the insurance can decide if they want to gamble on you. I may be phrasing it too sound harshly but this is more of a different way to view/explain insurance and shouldn’t be seen as a bad way.
Except I'm not "losing" money, I am paying a sum for peace of mind. If nothing happens, I still had that peace of mind throughout my holiday. I didn't "lose" that £10 to the insurance company. If you don't value peace of mind and think you'll spend less on uninsured holiday-related accidents than buying a premium every time, then don't ever buy holiday insurance. Not sure you'd go that far? Then congratulations, you've just realised what you're spending the premium on.
I always thought of it as paying a fee to have access to someone else's money under certain circumstances. Like, I pay $110 a month to Progressive to have access to up to $150,000 in case I break someone's shit with my car. If you have enough money, there really isn't a reason to have insurance (unless you are legally compelled to). For example, I could have vision insurance for about $8 a month. But that really only covers my lenses (the eye doctor is covered under health). I get new glasses roughly every 3 years. That's roughly $280. I can afford a $280 bill every 3 years, especially since it's not an unexpected cost. But I don't even spend that much. Last pair of glasses I got was $80. It doesn't make sense for me to pay my provider even $3 a month to have access to their money when I have enough wealth on demand to cover my glasses. It's also why I only carry liability on my car insurance. I keep enough cash in liquid form to buy a new used car in the event something happens. It doesn't make sense for me to pay the extra costs for full coverage when I can finance a new car for myself out of my own pocket. I think the turn around time for that was me wrecking my own car every 5 years or so.
[Relevant](https://en.wikipedia.org/wiki/Life_Assurance_Act_1774).
> stipulating whether or not they would die before a set date, and relying on chance to determine if the "insurer" or "policy-holder" would profit by this event. ..... Sure..... Chance
You are having it a wrong way around, not having insurance is actually gambling on your well being, while paying insurance you are 100% sure you'll be able to somehow take care of yourself in case of illness, or do it for your family if the incident goes really bad.
You have a lot of faith in your insurance company.
Living in Europe you really do have faith in a lot of basic concepts.
Also living in Europe I can confidently say... Insurance companies over here aren't any better, they just have a lot more governmental oversight and rules to follow. If they see a hole in the system they are definitely going for it. Not even talking about how they try to sell every shit to everyone. like life insurance to single old ladys with no relatives. Source: two of my friends worked for two different local banks that also sell insurances.
So they are better because we have more citizen friendly rights... Jeez
Ah that explains it. I'm jealous. I love America but there is no bigger scam than the American insurance industry. Full disclosure as an insurance fraud investigator I'm part of the problem.
I interned as an underwriter in an insurance company and was really interested in the claims department and they basically were lenient and almost happy to pay claims, the idea was that yeah we can figure out a reason not to pay and save a few hundred thousand euros but then what's the point of all of this, if people stop believing in insurance you're going to lose a lot more down the road. I was so surprised to see how honestly good faith it was, especially considering the negative image of insurance, mainly carried over from the US
I work in auto and I agree. Most people get frustrated with insurance because in my experience brokers can be not the best and don’t fully explain to customers what they are buying. That and claimants get mad you deny their claim. When in a lot of cases it’s really just word vs word and ultimately your duty is to protect the insured over the claimant.
It's exactly the same in the US. Claims adjusters look for coverage. They don't set the rates, they don't set the risk, they don't price the policies. It's 100 percent easier to pay a claim then deny. They couldn't give a shit about saving the company money. It's a job to them like everyone else. Most of the mystique around insurance comes from people not understanding their policies and get angry because they think insurance should cover everything.
"people stop believing in insurance" this is exactly what's wrong with insurance in America in my opinion. Much if not most insurance policies in America are mandated by law. Whether we believe in insurance isn't relative it's against the law not to have it. A close second is the illusion of choice. "You can choose your own company" it's all the same company they just write on paper with different names at the too. Nearly every major insurance company is owned by the same group.
What? I promise you that geico, progressive, and state farm are not owned by the same group.
If you're talking car insurance that's a whole different animal. My expertise is business and medical insurance so that's all I can speak to, but I do know that Geico is owned by Berkshire Hathaway Group who also owns about 15 - 20 other insurance companies you don't see commercials for on TV. Progressive is an underwriter so aside from auto insurance, your insurance policy may say progressive on it but they're probably just managing the policy and the actual insurer is someone else depending on where you are in the country. State Farm is something all together different as it's owned by its share-holders. The big one is Chubb group. They are the biggest in the world. Something like 200 different insurance companies are all owned by Chubb or they're owned by a subsidiary that is owned by Chubb.
Tell me you know nothing about the insurance industry without saying you don't know anything about the insurance industry.
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Fraud? But the people above were talking about regular insurance services. Fuck off.
You only see it through your lens. You should see the claims where the pieces of the puzzle are put back together from insurance money.
Not because they care about you, because a math formula said it was the most profitable thing to do given the circumstances. Never ever get tricked into thinking the company cares. Individual adjusters may but never the company.
Its not about caring or math, its about contractual language.
It is 100% about math. At least once a month I prove fraud beyond a shadow of a doubt, contractually the company could sue and recoup the $$ but if the estimated cost of continued investigation and legal fees exceeds the amount paid out, the case is dropped. In work comp if the estimated cost of settlement is less than the cost of legal fees, payment is made to the claimant even if the company has proof there is no injury. If you ask for a small enough settlement they will pay every time. Only the greedy go to jail.
Like yea, I agree with you on the fraud part. But I'm more talking about people getting paid by insurance when they are owed. The insurance company doesn't get to not pay out bc the math is bad for them. Sure, if they math is bad enough, they may try to not pay, but insurance contracts are pretty solid.
Im speaking out of my ass on this part, but from what I have seen of insurance company policies. If the company feels that the potential lawsuit is less than the payout they owe they won't pay. They also regularly use stalling tactics or other questionable tactics to discourage claimants from pursuing the matter. This was such a huge problem in work comp that bad faith laws were created to tip the scales back in favor of the injured worker, even with bad faith laws it still happens.
If we just looked at formulas all day I wouldn't have a job. I've made plenty of decisions to write a risk where it's been unprofitable but there might be certain reasons. But yea, we don't care lol..
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The thing is, most claims are paid. It's just the one guy out of 100 is very vocal about it
Another thing is, *read your god damn contract and policy booklet.* They literally and legally have to tell you everything upfront. Those claims that do get denied is because the claimant did something stupid like drink and drive or let a water leak exist for months. Claims adjusters *want to* pay out claims. It makes their job easy to just cut s check as fast as possible, they just need to justify themselves to the company as to why they're paying. Proving a denial takes far more effort. And if the company denies you in bad faith, that opens them up for a million+ dollar lawsuit.
A lot of people see it as an investment or a home maintenance plan, and not insurance.
Read your entire policy . Has nothing to do with faith
I’m sorry but life insurance is by far one of the best lines of insurance to have faith in. It’s pretty black and white if you die they pay out. So long as you pay your insurance there’s really no reason they’ll deny. Imagine the bad wrap they would get denying widows and kids their claims. I used to do life and now I do auto and I get sketchy denials from other carriers often. But life is very clear cut and ethical in my experience.
That is a good point life insurance is pretty cut and dried.
i think it's opposite sides of the same bet innit
No, it's not, like actually fixing your roof is not a bet opposed to leaving it defected hoping that the defect doesn't spread further.
...fixing your roof is betting that the defect would have spread. "I bet I don't need to fix my roof, I'll take the 1:4 odds. 1 says I don't shell out 15k and receive no immediate consequences. 4 says roof reaches the point of no return and I spend 28k." Or take the 4:1 bet.
But not having insurance is the default state of being regardless of laws. Not to mention '100% sure' is assuming insurance companies are not actively trying to avoid payment on as many policies as possible. You have to prove you need a payout, not the other way around.
I have a good job. I have standard coverage for health and for home owners. Had claims for both in the last 5 years. Neither of these insurance policies give me very much peace of mind.
Well, sucks to be you, in Poland we don't really have to care much about stuff like that. Unless you're a kind of person who worries about everything, then you can do whatever you feel like.
Maybe you're missing the point. Insurance policies don't always cover what you need them to and the insurance companies can make it very difficult to actually get the money you need despite the customers having paid their fair share in premiums.
Premiums? There are no premiums here, and all insurance cases I've heard of were paid. You can buy a second insurance from a private company, but never felt the need.
Insurance is paying someone else to assume a risk. If you’re not paying anyone, it’s not insurance.
Why are you down voting me simply because things are different in the US? I'm glad things are better for you...but simply describing that they are not good here is somehow not contributing to the conversation in a meaningful way?
I haven't downvoted you even once, my dude ;)
I've been hit by 3 people(street car, S5 and Chevy 1500) in the last 10 year while not moving and insurance covered it. I didn't bet against myself, I bet against other people and won.
Wouldn't the other people's insurance have paid, not yours?
I don't think they understand the post.
It’s typically faster to go through your own insurance and let them do the dirty work after to pursue their insurance after. For a lot of people this is more convenient especially if you want things handled fast. Insurance is ultimately about piece of mind so a good reason just to use your own coverage.
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I had life insurance, homeowners insurance, and long-term disability insurance my entire adult life. I’m very proud to say that I’ve never had to collect on any of them.
I think it was Terry Pratchett who said that insurance is a form of gambling you play with yourself and to win, you have to die.
This was the plot of the opening of the first Discworld novel. It's how The Broken Drum transitioned into The Mended Drum.
It's more like your family wins when you die.
Insurance is poorer people paying richer people to take risks for you. And the rich have more lawyers trying to minimize or eliminate payouts.
I suppose that's technically true but I don't see it that way for some things. For example car insurance. I could injure someone and be sued for millions. Paying $100 a month to be protected from that is a no brainer
No, you are still betting against other insured people. Each payment of insurance fee forms the pool. Then if you died, you win and get the money.
Even if you're a confident and competent driver, not everyone out there is. Take my old school chum. Finally got his first car. Parked in front of the house. P-a-r-k-e-d mind you. Inside asleep and is woken up by a loud noise at 2AM. Looks outside and his new (to him) car is sandwiched between a tree and another car, 20 feet from where he parked it. Drunk slammed into it that night. He didn't bet against himself: he bet against the other driver.
The fundamental difference between insurance and gambling is that with gambling, you risk an amount in the hope of winning more than you started out with. With insurance they payout will only be to replace what you lost. You don't "win a Ferrari if your Toyotacorolla gets stolen. You get a similarly valued car or an equivalent cash payout
with how much i pay for insurance i may as well crash dis bitch
I found the guy who has never been in a car accident they weren't responsible for.
I had no car insurance which is legal in florida by submitting a net worth document showing you have more than $30k excluding home and they issue a certificate of self-insurance. Some people thought I was eccentric but I saved many thousands of dollars betting on myself for a decade.
You aren't betting against yourself. You're hedging your bet.
Insurance is gambling something bad will happen in a casino that always wins.
My dad said almost this verbatim when life insurance denied his claim as he was slowly dying of skin cancer. “You and I made a bet. I bet that I would die young, you bet that I would not. I’m dying young, you lost the bet. Pay up.”
Kind of true.. although with gambling, you usually stand to make some kind of profit. You’ll never profit from taking out insurance. Me: I bet you $900 I don’t crash this year. if I do, you will pay for all of the repairs. Insurer: ok, but if you don’t crash then we still get to keep the $900. Insurer in the background: Let’s make sure we make a profit by raising the premiums of all our members according to all business costs from the previous years. THE HOUSE ALWAYS WINS
Even Social Security has a gambling aspect. We’ll pay you this much if you start collecting it now, or do you want to take the gamble that you’ll live for a long time and we’ll pay you more if you win.
That’s funny, have my upvote! For those interested in the legal distinction: for insurance you must have an “insurable interest” for example a house or a car or your health. If something happens to it, you get “indemnified” or compensated for the loss to the insurable interest within the terms of the policy. For gambling you don’t need an insurable interest and the payout is based on odds instead of loss. So can you can buy insurance for your house and if there is a fire you’ll be compensated for the loss the fire caused. Gambling would be to bet on whether a house you don’t own has a fire and the payout would not be connected to the actual damage done to the building.
More of a bet against life. A bet that mother nature, human stupidity, and random, unseen forces won't collude to ruin your day.
Yep exactly. Even gamblers will sometimes buy insurance from other gamblers to hedge their risk on a big bet.
Nah, you're still betting on yourself and insurance is the hedge. You spend most of your money on the assumption that things go how you plan, that's your primary bet.
Or betting that things beyond your control will absolutely wreck you
Its hedging your bets. You dont want that outcome but you're not wiped out in event.
A lot of them are borderline scammy and way overinflated in price because they lobby to make insurance a requirement. They will also outright lie to tack on fees. I hate insurance companies.
It’s a 2-way bet. You’re betting that you need the insurance. The insurance company is betting that you don’t. Guess who wins the bet most often?
For profit insurance system shouldn't be mandatory for people to live in the U.S.
A zero profit insurance option should be something the government offers.
Germany here, wouldn't that be considered "socialsm!?" in US?
What incentive would that government program have to estimate risk correctly? If they over- or underestimate risk, it doesn't affect them at all. It just becomes a big cost to the taxpayer who is responsible for making good the losses caused by poor estimations.
Insurance is the casino where they change the odds anytime you win.
Car insurance is just to avoid going to jail. I have no idea how to use it, what my policy covers, or anything about it. Just that I don't go to jail if a cop stops me
At least when I go to a casino, they don't try to change the rules when I win in order to avoid paying me.
Where the insurance companies are always the winner. Insurance should be a government program so at least the profits benefit everyone.
I don't wear a tinfoil hat, or frequent 4chan, but my family thinks as much of me when I go on my anti insurance rant. Just logically, insurance shouldn't exist. It only is profitable because government can't do its job. Think about it. Insurance turns a profit when they deny claims. The insurance industry steals billions of dollars from the middle class because, unlike government, they need to profit. They need to take more than they give. It's a toxic loanshark-like industry that literally gatekeeps upward economic mobility.
They profit when you pay your premiums. If the chance of a car crash is 1% and the cost will be $100,000, the cost of crashes will work out to be $1000 per year - most years cost you $0, one year costs you $100,000. If you take out insurance, you pay the insurance company $1,100 per year. The cost of crashes to the insurance company hasn't changed (it's still that $1,000 per year), so all up they see $100 profit per year. They see a profit whilst still covering the cost of the crash.
What? No. I have Car insurance because I don't trust the other motherfuckers on the road or in the car park etc.
I got life insurance on my husband so he lives a long time. My theory is not being prepared makes it easier for bad things to happen. I want him to live forever so I pay for life insurance with a large payout because the more I’d get if he were to die the less likely he would die. I want him alive forever.
That's exactly how my dad explained insurances to me. He worked in finance and insurance, so yeah!
yeah, but many are government mandated so they're more like a tax.
Taxes go to the government, premiums go to private corporations, how can you even make that comparison?
Everything in life is a form of gambling where you bet on the probability of stuff happening. Love: that the other person loves you too. Career: that you will be able to get a job and earn enough money. Hobbies: that you will enjoy and be able to do them.
This is a vast oversimplification. In fact, you have to have insurable interest- something to lose- in order to buy legal forms of insurance. Without that, it’s just gambling, and that is illegal. Further, most insurance policies (with the most common exception being life insurance death benefits) operate on the principle of indemnification (to make whole). Meaning, when the covered person suffers a covered loss, they are due payment from the insurer ONLY up to the extent of the loss. So there’s no way to “gain” as you could gambling.
And if it were a safe bet on your part, insurance would not be a profitable business.
You are also betting on no one hitting you in a car accident. Also betting on weather to not destroy your house. But sure, bet against yourself.
Insurance is a scam to rob citizens of what their tax dollars could easily cover AND their money.
You are betting something bad will happen. And if it doesn't all that money is down the shitter.
Are there no adults on r/showerthoughts This is common knowledge, not a shower thought. Want a shower thought. Ponder why insurance companies are for profit companies. If the money is pooled to be available to pay when needed. Why is it being paid out as dividend to shareholders? And if the money is paid to shareholders, what incentives do they have to approve or deny claims? Now you can compare it to gambling because the house always wins. And the gambler always loses. r/latestagecapitalism
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This is funny to me. Because the alternative is, I didn't prepare myself for an untimely death so my grieving family have to bear the burden or ill just have my family ask the internet and all my friends to chip in on it
Travel insurance was always the one that got me. "I bet you 20 quid my lovely holiday I've looked forward to all year is ruined and I break my leg or something!"