What is the point of insurance? Home, health, etc? I'm confused

[pimpbot]

http://www.washingtonpost.com/wp-dyn/content/article/2005/11/07/AR2005110701461.html

Okay, so the insurance companies actually had to pay out because a disaster hit. So now they raise rates?? Huh? I thought the point of insurance was IN CASE of disaster, you're covered, and all is well. I don't see how an insurance company would NOT make money no matter what. Collect a bunch of money for nothing, then if you ever have to actually pay out, just raise rates... ON EVERYONE! What does a hurricane in LA have to do with rates in DC?

I figured it out, 25 years of paying home insurance, I would have bought a house for the same price that I bought my original house for. Same thing with health and auto insurance. For the amount I've paid over the years on my car insurance, I could afford a fricken new car by now.

Rant over. Anyone else feel the same way?

[400Years]

1. it's a colossal scam

People used to see it that way. I recently was watching some old black and white movie and the main character was approached by an insurance salesman and the main characters response was something like "You want me to buy what?!!"

[pimpbot]

8. Plus, its REQUIRED

I couldn't get a mortgage without having to pay insurance. Supposedly to cover the banks ass in case my house burnt down. Well, maybe for the privelge of paying them tons of interest every money, they should get their own damn insurance if they want it.

The past 25 years I've never seen anyone in my family take a claim against their home insurance. Now the companies want to raise rates in areas that weren't affected by these disasters? Give me a F'ing break.

Same thing with cars. I've been in one accident, and it was when some redneck in a pickup truck didnt see that everyone stopped at a red light and rear ended me. Of course his insurance picked up the tab. Now, say he didnt have insurance, we'd be SOL right? The damage was $4000, I paid more than that in 5 years of car insurance, so in my mind, i'd still be ahead if I was paying my own way.

Health insurance, same gripe. I pay about $100 a month. However, anytime I go in for something (very rare, usually just a yearly phyiscal and 2x yearly dental cleaning), I end up paying about $50-100 a visit. WHAT THE FRIG. What happened to that $1200 I pay every year? ARGHHHHHHHH

[TheDebbieDee]

2. Insurance is the biggest LEGAL scam in the world today!

Insurance sales people are licensed con men!

There is no scum on this earth that is scummier than insurance sales people...........'cept maybe lawyers. :^)

[annabanana]

7. scummier scum

Is the guy that works for the insurance company who's job it is to see to it that you have to SUE them to get them to pay what they're supposed to.

[BurtWorm]

9. It's a scandal that our health care is financed by people whose job it is

to see to it that they don't pay for our health care. It's a totally twisted system.

[Skidmore]

13. And to add insult to injury, many states require

you to purchase insurance for auto, home, etc.

[Larissa238]

3. For me, I get free health insurance... kinda

Since Im too poor to afford it, I can get some medical services free. That saves me a ton of money. Even if it was a low cost service, it would still save me money on doctors visits and perscriptions. It may not make sense to some people, but in times of sickness and or disaster, it can be a wonderful thing.

[Swede]

4. Everyone needs insurance,nobody likes to pay for it,like taxes I guess.

It's part of the economics of the society we live in.

[Cleita]

5. It's a business that gambles on not having to pay too many claims.

I really think insurance should be outlawed for most coverage and the government should have a disaster fund for emergencies and other needs insurance covers. We should also have universal health care so that we wouldn't need health insurance. Companies could buy into the funds according to their needs with no repercussions for having to use it when needed. As far as I'm concerned the insurance industry is the middle man we need to cut out to make things run more efficiently.

There would still probably be a need to insure rich people's jewels, art works, antiques, yachts and horses. Let them earn their money with them.

[pimpbot]

16. They dont really "gamble" do they?

I mean, if they have to payout, they just raise rates for everyone else to cover their ass. I dont really see how they could lose money.

[Cleita]

17. It's more like the Casino doesn't really lose. They don't

lose if they calculated their losses right. Their M/O is not to insure anyone who might collect, like if you are a good driver, chances are you won't get into accidents. The fact is some insurance is a necessity like health insurance and it shouldn't be insurance at all. There should be a fund everyone pays into so that those who need it can use it either now or in the future when they will need it. Health care should never be under insurance. I don't think disaster insurance should be either.

[Gormy Cuss]

29. Their gamble isn't just with choosing customers

The main source of profit for insurance companies are investments. Rates were held low in the 1990s in part because they were making so much money they could afford to cut deals in order to get more business. These days they don't make quite so much on the investment side and the premiums have skyrocketed. The premiums are meant to be a break-even deal in good times, a profit center in lean times.

Insurance companies rarely 'lose money.' Usually when they say that they mean they didn't break even on premiums vs. payouts but they may have a profit because of the investments made on those same premiums.

[DaveJ]

6. I would not go so far as to say scam...

Insurance is a very stable business due to their ability to control the rates of products that people feel, or are, obligated to buy into, similar to the health, banking, and oil to name a few.

Health insurance, in particular, should be run by the government, not by thousands of greedy executives who care about nothing but their own take home pay.

[Lena inRI]

10. Yep, as a matter of fact. . .

insurance companies our the original users of TERRA, TERRA, TERRA tactics to get us to pay through the nose for incidents that happen hit-or-miss. . .and if you do live in high risk, guaranteed danger areas, they WON't sell ANY insurance to you. . .Bwaaaaaahaaaaaa!

They have us over a barrel!

Try to find a company that gives you dividend checks annually if you never make claims. . .at least it's a little bit of payback. . .Amica Insurance in New England area does this.

However,I agree with you that most companies are cutthroat. . .rolling in profits.
:mad:

[LisaLynne]

11. I worked for an insurance company years ago and the thing is ...

once you pay your premiums, they think that money is theirs. They seem to have forgotten that what you are paying for is their service of paying claims, if needed.

[newportdadde]

12. Its a win win business, profit from the stock market or policy holders.

They do the math probability and even in the case they loose on the odds they still extract it back out. When was the last time you heard of an insurance company going broke?

The problem they are having now is the crappy stock market. Notice nobody talked about the 'skyrocketing' cost of malpractice until the last few years. Thats because insurance compaines haven't made squat in this sideways market and they will never reduce profits or *gasp* take a loss like other business, they will just raise rates and increase their inbound cash flow to make up the difference.

Last year before the election my doctor was bitching about malpractice insurance here in MO had gone up in the past 3 years and how Baby Blunt was going to solve it. I simply asked her.. what was your rates like in the 90s? "They barely moved." Ow really what was the market doing in the 90s? There you go.

[pimpbot]

15. Exactly! We pay no matter what!

Only in the extreme case will paying insurance actually work out. IE You are in a permanent coma and medical bills are $100ks a year. At that point, I hope someone would pull the plug on me :).

Its funny, if you've ever played blackjack, you have the opportunity to take "insurance" when the dealer is showing an Ace. Noone ever takes it since the odds aren't worth it. Unfortunately, I dont have a choice in paying auto and home insurance.

[sinkingfeeling]

14. In most states, you can be self-insured. All you have to do is save

enough money to cover liability, the cost of your car, the cost of another's car/s, rebuild cost of your house, the amount owed on your morgage, and all of your future medical bills.

Just as there were once local building and loans, where people saved their money and borrowed money for mortgages, there were local insurance groups. But as we know, America is moving to the massive monopolized industries. Soon you will probably have a choice of only 2 or 3 companies.

My chief complaint with insurance, especially auto, is that you are in a massive pool of people, and no matter what your 'record' is, you will never have your rate reduced. I drive only about 7-8,000 miles a year and have been violation free for over 40 years. It doesn't matter!

[Digit]

19. It can matter

There are providers out there who only take on the best (ie lowest) risks and their premiums are lower.
I have my auto insured with a company like that.

[Kolesar]

18. Don't buy insurance for a risk that won't ruin you

That's why I dropped collision insurance on my car when it dropped to $8000 value. See if you can raise your home deductible to something you can manage to pay.

Only buy term life insurance if you have a dependent that needs a college fund or money to retire on. This is an aside: Stay away from all those Universal/Whole/whatever insurance policies, btw. They are a poor investment. You would be better off with savings bonds, or a mutual fund in stocks or bonds.

[pimpbot]

21. Good advice

I didn't bother with life insurance since I have no dependents. Although the person working for the company was shocked. "Oh, everyone gets it, are you suuuuuureeeee?"

I dropped collision on my car as well, since its older and I do all my repairs myself. If it was totalled I can afford to get another, especially with the $4000 I've saved from not paying collision so far.

I have only the standard health insurance, some of the plans were like $200+ a month! My old job I worked for a private contractor, and they paid health + dental insurance, was pretty nice.

[triguy46]

39. Best response so far. n/t

[Mutley]

20. Well, I only have catastrophic health coverage.

I find it a super waste of my money to pay my insurance company $100+/month when I go see a doctor once every two or three years, and I haven't had to make a hospital visit since I was a child. I have the minimum legal amount of car insurance, and I don't own a house, but I doubt I'll go all out for house insurance after seeing the way the insurance companies have been acting this year.

[porphyrian]

22. It's the second oldest criminal enterprise...

...made mandatory for your "protection."

[harlinchi]

23. I raised a similar question in another thread...

...located here:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=2232246&mesg_id=2232246

I asked, in effect, why must my premiums go up when I live in a lower-risk (as far as hurricanes go) area. Can we not get a policy that caters to folks living in lower risk areas?

[pimpbot]

25. I agree

If you live in a high risk area, then the premium should reflect that. If you choose to live in a low risk area, then you should pay less.

[pitohui]

33. well don't drive a car or eat food if that's yr attitude

we are not living in a high risk area for fun & titty bars

we drill and refine the damn oil in YOUR damn car, and we have the major port to bring in the grain to put food on YOUR damn plate

when people drill offshore florida & california, when they can use the star trek teleporter instead of the mississippi river, then i'll be interested in hearing their views about people who live in so-called high risk areas

it's interesting abt how you're willing to take, take, take from what what we have to offer but you don't want to give even a little

this attitude belongs on the other web site, not here

[Bluerthanblue]

44. stickin my nose

in where it doesn't belong, but Pitohui, I believe you should receive help without having to 'buy insurance' for it- As a part of this family aka. community we call America.

There ARE folks who go through life with very few (my perspective on this is admittedly tainted) trials, and struggles. While they may not appear to 'get back' what they believe they 'put in'- they have gotten theirs by being spared the trauma, sorrow and loss that comes with needing to attempt to rebuild a life for any reason- (illness, natural disaster, or life challenge of any substantial degree).

Some might call this communism. They are the losers. The knowledge that we all need each other, and are impacted by each others actions for good or evil, is something folks would rather deny than embrace, because it gives them a false sense of control over 'their' world- Money, power, influence, force may 'buy' one a measure of temporary 'denial'- but reality is, we are all subject to the same horrible fates that no amount of money can protect us from completely.

peace-
to you
and all.
blu

[harlinchi]

45. Someone else nicely made me aware of that point as well. I wasn't...

...thinkin 'bout working class folk or even say, those with houses worth $750,000 or so. Now if the folks drillin' for 'my' oil and providin' grain for 'my' plate are livin' in houses that do not exceed a reasonable amount ($750,000 was my arbitrary number) then I'll rephrase. I'll even listen to you tell me what is a reasonable amount; I do not know for myself. But don't tell me you're down there providing things that are just taken by others like me out of the goodness of your own heart! Next you'll tell me that Halliburton workers are only in Iraq to build new schools and hospitals, the altruistic angels!

[TrogL]

24. I have yet to collect on an insurance policy

My house was broken into and bunch of stuff stolen. They made the process of trying to collect so complicated and basically impossible that I gave up in disgust.

A senile old lady with lapsed insurance rammed my truck and it was going to be cheaper to fix it myself.

[methinks2]

26. it's so god-fearing right-wingers can gamble without calling

it gambling. Insurance is gambling. And the bosses raise the rates and if you don't like it, you pay. Or you pay. Like the old Mafia. They may not literally break your legs, but they'll break you in other ways.
:puke:

[sendero]

27. I call insurance...

.. a "cost plus" business. It is like a casino, except they take a lot more than 10%.

If claims are high, they just raise the premiums. They NEVER lose money over the long term, and they get special accounting rules that let them hide investment profits.

I always buy only the insurance I really have to have. I have full high-deductible insurance on my house, but not on my mobile home in the country because I could afford to replace it if it were lost.

I have liability coverage on my cars, and comprehensive, but collision only on cars 5 years old or less.

Life insurance (death insurance, betting you are going to die) is needed only if you have dependents who would be left in dire straits upon your passing. For most 2-income families, life insurance is a waste of money IMHO.

Yes, insurance is a legalized racket.

[GreenArrow]

28. Ripoff Ripoff Ripoff Ripoff RIPOFF RIPOFF RIPOFF

RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF RIPOFF!!!!!!!!!!!!!

It's a fucking ripoff. A rigged game.

[pitohui]

30. i wonder -- i have not received a damn dime

it's scary, my insurer (a major) is not paying claims, i have filed a complaint w. the insurance commissioner, my claim is the in the low five figures, but many people here have lost everything -- hundreds of thousands of dollars

your idea of the "back-up" house would not work because of co-variance, for example, a friend of mine lost not only his home but all of his rental properties because they were in the same part of town, i guess if you bought yr second home in a distant location, it would be safe from covariance but in practice it would be a real nuisance & a hassle!

also it is not true that 25 yrs worth of what i spent for my insurance would have bought me another house, for most of those years (until ivan) homeowner's insurance was a loss leader & i got it at a derisory price, even at today's much more expensive prices, what i can expect to pay over the next 25 yrs would not replace my house

so like most people i do need the insurance coverage

i feel some insurance execs need to go to jail if claims are not paid

if i place a bet on the blackjack table, and i lose, and i pick up my chip and try to walk away, i am arrested for a major felony, even if it's only a $25 chip

but the insurance companies are dragging their feet & not paying out and there are no prosecutions or arrests?

[ComerPerro]

31. Auto insurance is just as big of a scam

I understand why its needed, because there are a lot of risks involved.

And, if I actually had confidence in how it was run, maybe I wouldn't hate it.

But whats the point of having coverage if someone hits you in an accident that isn't your fault, they can refuse to pay, and your rates still go up?

Its bullshit.

[Midlodemocrat]

32. Wow, your home insurance rates must be astronomical.

I only pay $800 a year for home insurance with a $2 million umbrella, and there is no way I could purchase a home for $25,000.

[pitohui]

34. maybe they're in the high risk pool...in hawaii

the math don't work for me either :shrug:

[burythehatchet]

35. The current state of the insurance market is definitely poor

However, if you really want to understand insurance, you will realize what that insurance has been a key factor in the growth of the modern economic environment.

The way the market is structured today, it is a huge scam. Its simply another cost plus industry that is under-regulated in where it should be and vice-versa. Without going into a lengthy dissertation, I'll ofer you the example of how insurance first came to be formally recognized as a tool of commerce. In 19th century England, the trade routes of the Far East were becoming extremely lucrative and shipowners were eager to cash in on this trade. However, the shipowners and investors were at great risk of losing their investment in case of a shipwreck or pirates, etc. It was increasingly difficult for individual investors to bear the risk of loss to their cargo. So they started to form clubs. These investment clubs basically agreed that if a member lost his investment due to specified reasons, then the group, or syndicate, would make the investor whole to some degree. This allowed everyone to assume greater risk and therefore generate greater profits. This collaborative came to be known as Lloyd's of London.

[Fescue4u]

36. I hear ya, buts its necessary. true story follows...

Back in 1999, before the dark times, before the empire...
(sorry I just watched star wars :) )

I bought a brand new Mercedes, paid $56,000 for it. I called my insurance agent, told him what I bought and he quoted me a rate and said I'll take it. I think it was about $900 bucks for 6 months (which is rather high for my area but it was an expensive car).

So I had it for about 3 days. On the 3rd day Im driving it home from work and some idiot turns left in front of me...

After much wrangling with both my insurer and the "gap insurer", insurance paid off the $55k loan, a few months after I paid my $900 premium.

Some times, the insurer DOES lose

[triguy46]

37. so you have money in your pocket to cover all your potential losses?

You have paid premiums over 25 years that would have bought your house at its cost 25 years ago? How far would that get you today? Hell, its insurance. Buy what you need or what your risk tolerance is and go on. Don't want it? don't buy it. But if I have a wreck with you and its your fault and you're uninsured, you'll be cleaning my house till eternity.

Actually, one thing that would really help is if insurance companies were required by law to open their books.

[sandnsea]

38. We're subsidizing investor's income

We give insurance companies money so that they can invest it and make money for themselves and their stockholders. The premiums are always calculated to cover losses, wait until you make a claim and they raise your rates too. Or make two claims in a year and they cancel you for using your own damned insurance. I agree, it's become a scam.

[Bluerthanblue]

40. my wise grandfather said "It is betting against yourself, and being

guaranteed that you will win the bet, making you a loser either way you look at it". He was a real old fashioned General Practitioner, and a farmer- lived 94 yrs, and practiced medicine until the early 60's- (in his late 80's) before insurance became the nightmare it now is-
I have very little insurance- no health, only have liability insurance on my auto, because i wouldn't want to be at fault in an accident, and leave the other person with nothing- and can't afford home insurance. We live in a very ...'rustic' home on a dirt road, but there is not mortgage to force us to carry insurance, which would mean having to give up our home.

Auto insurance in our state is optional- unless you've been convicted of DWI or have a bad driving history. My 22yr old son has his CDL- driving truck as part of his job, and doesn't drink- we only have the minimal coverage, for the reasons i listed above.

As for life insurance.... i've never understood that one- Cremation can be done for under 1,000 here- and casting my ashes to the wind will only be expensive if my kids take me to Jamaica to do that as i've asked them to do- so they can experience the one dream i've always had- to see the island, even if it is in spirit only.

Insurance is alot like dogma (i'm not talking about spiritual faith) It is mostly useful for those who don't believe in positive outcomes.

In my offthewall opinion.

[InvisibleTouch]

41. I feel exactly the same way.

I've been vehemently anti-insurance for years. The whole concept strikes me as a huge rip-off. I've had knock-down drag-out arguements with familiy members over it, who think I'm either misinformed or crazy (and for my part, I think they're brainwashed and paranoid), but I'm not likely to change my mind on the subject. Sure, it's supposed to be "just in case," but if you take the money you flush down the toilet in insurance fees, and put it aside for such a time as you may need it, I dare say you'll have enough to take care of the problem, plus extra left over. The only insurance I pay for, is that which I have to by law, and even that pisses me off. I'm aware that if there's some massive calamity that I can't afford to pay for, I may be SOL - but that's my choice, and my right to take that risk. I'm not asking anyone else to come rescue me.

There's my rant for you. :)

[SoCalDem]

42. In the beginning, I think companies had to reserve a large portion

of the premiums paid, so they were available when they had claims.. These days, insurance companies use that money to build bigger buildings, dabble in real estate, and the stock market..

and of course if you actually file a claim, you are scum of the earth, subject to cancellation, rate increases or both, in reverse order..

The principle is sound..many people paying a small amount into a large pool, and the money there reserved for the few casers when the house burns down, the traffic accident happens, etc.. but today's reality is that the second they get your check, that money is G O N E ..and how dare you file a claim :eyes:

[sepia_steel]

43. I had a car for 8 months

worth about $8000, a nice '96 Honda Accord. It was stolen from my driveway. I was fortunate in my case; I hadn't paid down enough of it, and my insurance paid off the rest of my loan, over $7000, so my dealer had no problems getting me into another car.

My husband got a new Jetta, and after about 2 weeks he had an accident (his fault). He was so embarassed. We had to pay $500 and our rates went up, but we were really glad we had insurance.

On all of our car loans here, finance companies will NOT lend you the money unless you keep your car insured, full coverage. But I would like the choice, IF I had the money saved up, to not have to pay almost $300 a month for our two cars.

Same with home insurance. Personally I'd be afraid to be without it, but I think it should be a choice.