I think insurance can be good for people to some extent. Still, insurance companies are just trying to make more money. So they create contracts where they don't pay people anything afterward. I ran into this problem recently when I hurt my knee, and they refused to pay me. I contacted knee injury claims, and they helped me settle the issue. Have you encountered problems like this?
I have done some rough calculations and I figured out that my family has spent over $600,000 thus far on insurance premiums over my life. (Car, health, home, life). I am 55 years old. And my company pays all my health insurance! I only pay my wife's. So my figure is probably lower than most. Besides check ups, we have never had any health issues, no home claims and no car accident claims. It is frustrating to think that if I was disciplined and self insured myself, I could have invested that money and come out way, way, way ahead.
It is easy to hate insurance but it seems to be a necessary evil. But you can see why smart organizations self insure.
Insurance companies can be really tricky sometimes. As a professional lawyer, I recommend to my customers always check the contracts they are signing or take their time and consult with me about the contract. Some insurance companies play their games with customers, but you can make the insurance mechanisms work properly. Sometimes it is really important to have the proper insurance, but not overly expensive. Another thing that is really helpful is using some tax fees to improve your financial state. Services like squeeze.com will help you to adjust your money more effectively in this case.
Think about it. If you spend a lifetime paying into all these different types of insurance policies- car insurance, house insurance, health insurance, life insurance, etc.- are you really better off? Of course, the insurance companies win in the long run, guaranteed, because otherwise they wouldnt exist. But do individuals benefit from these insurance companies in the long run? More often than not, I'd say no, because if that werent the case then these companies wouldnt exist. It just seems like one gigantic pyramid scheme. Like a casino but without any of the fun.
Insurance isn't an investment; it's risk management.
The objective isn't to "come out ahead," it's to keep from being financially devastated if something bad happens. If you pay into these policies all your life and never use them, that's a good thing because it means nothing really, really bad ever happened to you. It is still wise to have appropriate insurance coverage because really bad things can and do happen.
It's one product you buy HOPING you "lose" on it, because that means you never got cancer, never had a car accident, you never got sued, your house never burned down, and you didn't die unexpectedly with dependents who count on your income. But you have it because we live in a world where those things do sometimes happen.
We have to address specifics. Insurance companies due to their influence & power are able to get legislation written in the favor of insurance companies. Much of the insurance we purchase, as U.S. consumers, we have no choice:
* Either we purchase liability auto insurance or we have to allow one's state to hold a huge sum of money in escrow.
* Either a person or family or business makes greater than 20% down payment on real estate or we are legally mandated to purchase mortgage insurance.
*** Whole Life Insurance v. Term Life Insurance. I know the argument from all sides. I have worked for insurance company that paid a good amount of money when we got our clients to buy whole life but insurance companies pay peanuts for having clients buy mutual funds. I have worked for investment firms who paid peanuts for getting clients to buy whole life but we got paid better for getting clients to purchase mutual funds.
If a person has wife &/or kids and employer offers Group Term Life, purchase maximum allowed of Group Term Life. There is no reasonable other side argument against purchasing Group Term Life policy for a person with kids or a person with a spouse.
Not all employers offer Group Term Life. Some individuals may need more life insurance than one is able to purchase at employer sponsored Group Term Life. Individual is now looking at additional Term Life Insurance or Whole Life Insurance. Max out 403-B/457 or 401-k plus her & his I.R.A. if married. Then set up college funds for kids. Has a person or couple purchased a home yet? No one should live in an apartment with whole life insurance. If a person makes so much money, group term life insurance at work is maxed out. A person has maxed out 403B/457 or 401-K, a person/couple has/have maxed out hers & his I.R.A., college savings plan(s), series I & series EE saving bonds for the kids and a home owner. If after ALL THAT, a person or couple want to use whole life as a tax shelter, whole life may be considered. Remember, every dollar paid into a whole life policy is a dollar not directly being placed in bond & equity markets.
* Don't get carried away purchasing too much property & casualty insurance either. Every dollar purchasing p & c insurance is a dollar not being invested in bonds &/or equities. Or if a business purchases p & c, every dollar purchasing P & C insurance is a dollar not spent on R&D or other necessary investments and expenses.
No, it is not a scam. Insurance could help you avoid spending thousands of dollars if something bad happens in your life. In general, maybe you don't need it, but if you have an accident or another serious need of money, you won't survive without insurance. That is why there are countries in the world where insurance is mandatory for all citizens. If you are interested, find more information on https://squeeze.com/insurance/life-insurance . I am sure you will find something interesting there.
Think about it. If you spend a lifetime paying into all these different types of insurance policies- car insurance, house insurance, health insurance, life insurance, etc.- are you really better off? Of course, the insurance companies win in the long run, guaranteed, because otherwise they wouldnt exist. But do individuals benefit from these insurance companies in the long run? More often than not, I'd say no, because if that werent the case then these companies wouldnt exist. It just seems like one gigantic pyramid scheme. Like a casino but without any of the fun.
My daughter was a passenger in a car accident. The medical bills are around $125K just for her. A lifetime of premiums will not add up that.
So yeah if you never use the insurance then it can feel like a scam.
I wouldn’t go as far to say it is a scam. But because it is made mandatory by governments to legally drive it is way overpriced. To me it’s crazy that a decent insurance policy can cost as much as your car payment especially for young people which insurance discriminates against
Think about it. If you spend a lifetime paying into all these different types of insurance policies- car insurance, house insurance, health insurance, life insurance, etc.- are you really better off? Of course, the insurance companies win in the long run, guaranteed, because otherwise they wouldnt exist. But do individuals benefit from these insurance companies in the long run? More often than not, I'd say no, because if that werent the case then these companies wouldnt exist. It just seems like one gigantic pyramid scheme. Like a casino but without any of the fun.
Insurance isn't an investment; it's risk management.
The objective isn't to "come out ahead," it's to keep from being financially devastated if something bad happens. If you pay into these policies all your life and never use them, that's a good thing because it means nothing really, really bad ever happened to you. It is still wise to have appropriate insurance coverage because really bad things can and do happen.
It's one product you buy HOPING you "lose" on it, because that means you never got cancer, never had a car accident, you never got sued, your house never burned down, and you didn't die unexpectedly with dependents who count on your income. But you have it because we live in a world where those things do sometimes happen.
The really bad thing is you missed out on thousands of dollars every year as a young adult that could be opportunity lost capital gains in the tens even hundreds of thousands if it were invested wisely. Instead it all sits in the coffers of the insurance company a grows a generally useless business with employees who have no real skills who will be replaced by AI technology
I wouldn’t go as far to say it is a scam. But because it is made mandatory by governments to legally drive it is way overpriced. To me it’s crazy that a decent insurance policy can cost as much as your car payment especially for young people which insurance discriminates against
Car insurance is based (in part) on the likelihood of a person having an accident. Young people have a tendency to have more incidents due to inexperience and immaturity and thus should have higher premiums. Yeah, it sucks if you (or your kid) is a cautious driver, but that kid is still more likely to have an incident than a 35 year old.
There is no single answer to this question. Of course, insurance companies benefit from this. However, do not forget that you will receive a decent amount of damage if something happens to your insured home or car. In this scenario, it does not seem like a scam anymore, does it? The only thing I think is that you need to look for good and inexpensive insurance offers. Before buying this or that insurance, you need to compare home insurance rates. This will allow you to choose the most advantageous option for you. If you still think insurance is a scam, just do not buy it.
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