Is insurance a scam?

[natedagg]

here's the real problem (and where the scam will be exposed in the future): what happens when you go to collect your claim but the insurance company doesn't have the money? It was poorly invested and there is no longer enough of it. Oops!

 

[Lee]

here's the real problem (and where the scam will be exposed in the future): what happens when you go to collect your claim but the insurance company doesn't have the money? It was poorly invested and there is no longer enough of it. Oops!

All insurance companies are rated in several different systems, am best, moody's, standard and poor etc.... It is your job as a consumer to check out the financial strength of these companies. The insurance companies are about the most publically regulated and publically disclosed companies in the entire country. It is no different than buying a car. If you buy a Yugo, sure it was cheap, but it has a much higher chance of breaking down. If that happens, you cant get back and forth to work. Insurance is no different. Sure its more expensive to have a bigger insurance company, but they are typically more financially sound. I think the biggest problem with insurance and insurance prices lie with the current judicial system and the amoung of money being spent on various torts. Both doctors and auto insurance companies spend billions of dollars fighting law suites and paying settlemetns. Control the law suites and we will control the out of control insurance prices.

 

[The Voice]

All insurance companies are rated in several different systems, am best, moody's, standard and poor etc.... It is your job as a consumer to check out the financial strength of these companies. The insurance companies are about the most publically regulated and publically disclosed companies in the entire country. It is no different than buying a car. If you buy a Yugo, sure it was cheap, but it has a much higher chance of breaking down. If that happens, you cant get back and forth to work. Insurance is no different. Sure its more expensive to have a bigger insurance company, but they are typically more financially sound. I think the biggest problem with insurance and insurance prices lie with the current judicial system and the amoung of money being spent on various torts. Both doctors and auto insurance companies spend billions of dollars fighting law suites and paying settlemetns. Control the law suites and we will control the out of control insurance prices.

While I partially agree with that, drug companies also take advantage of people. They frieken advertise their drug on television and wine and dine their potential customer (the MD).


The Advertising (Other then luxory drugs and over the counter drugs): If my doctor wants me to have something, he'll give it to me. Advertising costs a shit ton as well, I don't wanna be forking this bill when I am sick.

Wining and Dining: How is this even legal? It seems a lot like bribery to me. Plus, my doctor already makes enough money off me. Why should I have to pay him bonuses (Tickets to games, food, ect...)?

 

[The Oi]

Good questions LBJAlltheWay. As a drug rep I can give you some answers here.

Drug companies also take advantage of people. They frieken advertise their drug on television... Advertising costs a shit ton as well, I don't wanna be forking this bill when I am sick.

I personally don't see the television advertisements as that big of a deal. The goal is to get you to ask your doc about these drugs as well as to remind the docs that these drugs are out there. It ultimately comes down to your doc's response to your questions about the drug and their own personal belief in it.

As for you footing the bill for advertising...it would be awfully prudent for you to have insurance to prevent this from becoming an issue. If you have a $20 co-pay you're not really going to be affected by the advertising costs for big pharma. That said...I can certainly understand the mistrust. Pharma companies spend a LOT of money to research, develop, and market their drug.

and wine and dine their potential customer (the MD)....Wining and Dining: How is this even legal? It seems a lot like bribery to me.

So you know...doctors aren't a customer in the typical definition of the word. They don't pay us for any services or goods. Doctors offices are generally capitated (look at it like a salary cap) as well so it is in their best interest in many cases NOT to rx (write) our branded drugs and so they won't. The nature of their relationship with insurance companies is that docs are limited to how much of branded drugs they can write. And because of this relationship it can ultimately cost a doc money to rx our drugs. As for the wining and dining...before I got into the industry there was a whole lot more than that going on. Reps were taking docs out deep sea fishing, giving out season tickets, anything you can imagine to convince docs to write their drugs.

In case it makes you feel any better, the pharma industry has been heavily regulated since then. We are not permitted to take docs to off-site (out of the office) meals anymore, unless it is for an educational speaker program authorized by the company. In addition to that, the only perks we can provide to docs are:

(1) lunches ifor the docs and the office staff ($25 limit per person)
(2) studies related to our drug and other drugs (if you see those as a perk :chuckles

We aren't even permitted to bring pens, plates, cups or anything else into the offices anymore.

So as for bribery...it's too heavily regulated for people to be doing this on a regular basis without getting caught. If there was some going on, reps would be getting fired.

Plus, my doctor already makes enough money off me. Why should I have to pay him bonuses (Tickets to games, food, ect...)?

Docs don't ALWAYS make as much money as you think. There's some in my area that are making as little as $60k. It depends on how they run their business. As for you paying them bonuses...you don't. Any interaction between a rep and a doc doesn't cost you a cent. Unless you mean that pharma companies are charging more for their drugs so they can make back the $ spent on lunches. And even in that case...if you have insurance this won't be a concern for you.

 

[TAS]

Health: Its free over here.

Life Insurance: I don't recommend it for a young adult but if your in your late 50s - 60s it wouldn't hurt having it.

House/Condo Insurance: Must have.

Car Insurance = Biggest scam. It's ridiculous over here. Even though i have a clean record, I pay $496/month. I am a pretty good driver & i take care of my baby. Tires are changed seasonally, I check liquid levels in the morning, oil change every 5000km etc. I have been driving for 5+ years, accident & ticket free. But until i hit 26 it won't go down.

 

[jjc58]

Health insurance is not a scam. As nice is it to go to the doctor's and pay a $10 co-pay, that is not the purpose of health insurance. Max's wife, now that's health insurance. Without pulled risk, even Max :chuckles: would (presumably) have trouble putting together the payment. Less drastic, my wife giving birth would have cost $40,000 without health insurance--granted, she had a 38 hour labor and was on pain meds for 10 hours or so, so her charges aren't typical.

While society as a whole is paying, in any given year, more than their fare share, there will come a time when every single one of us will need it and will recoup the investment. What happens if we don't have health insurance? In situations like that of Max's wife, the hospital doesn't get paid. That happens enough, the system falls on its head.

Note, this discussion does not touch Universal Health. Universal heath coverage is, essentially, forced health insurance. We pay our premiums in the form of income taxes, the government acts as the insurer. In addition, it presumes that health insurance companies actually make good on their contractual obligations.

Car Insurance--Forced collision insurance is a good thing. Uninsured drivers are cost to society. Say you get hit by a 20-year old who's in college and has no occupation other than moderating this website. The parents aren't going to voluntarily foot the bill--kid's over 18, right? Get a lawyer? I'm not touching that case. There's no chance of recovery as the kid is judgment proof. If he had a house, we could put a lien on it, but he doesn't. Can we get the parents on the hook? Legal question based on state law, but it decreases the likelihood of success. Even if we recover, I'll recoup my expenses and take 40% of the judgment off the top as my contingency fee. (Note, I do not practice personal injury law and have never taken a case on contingency.)

Long story short, you're screwed and out the damage. If you're injured, health insurance will cover but the cost of your car? Done. If you have a lease, you continue to pay the premiums but you don't have a car anymore.

Life Insurance may or may not be a good idea. With a kid and a stay-at-home wife, it would be irresponsible for me not to have some life insurance. Thing is, term life insurance is dirt cheap at this point in my life. As we grow older, insurance becomes more expensive.

I haven't decided about whole life. Whole life is an insurance policy with a forced investment aspect to it. The premiums are much higher than term (for me, about 18 times) and the return on the investment is not so good at the beginning, as you pay the cost of insurance upfront. At some point, however, the return becomes excellent. The big advantage is that it grows tax-free and is only taxable at withdrawal. However, once you have a nice sum built up, you can borrow against your benefit and avoid paying taxes altogether.

That said, whole life is only recommended for those with considerable income--highest tax bracket types. Personally, I'm leery of committing myself. I'd rather invest the money myself.

Homeowners Insurance is a no brainer. First, you can't get a mortgage without it. Second, can you imagine a fire burning away your life's savings?

Renter's Insurance is worth looking into. I never had it. A friend of mine, though, had it and thank god. He lived in a multi-unit buidling in D.C. The tenant below must have knocked over a candle or something, but long story short, he lost all his possessions (he wasn't in his apartment when it happened). Computer. Furniture. Flat-screen. All his clothes, including four or five suits.

The insurance company put him up in temporary housing until he was able to get a new place, replaced his furniture, and gave him a stack of money to buy suits, TVs, etc. He still lost out a bit, as I don't think he got full value, but without it, he'd have been screwed royally.

Mortgage Insurance is a scam. In the old days, you could get around paying it by taking a primary loan at 80% of appraised value and by covering the rest with a 20% downpayment or with a second mortgage. Rules might have changed with the credit crisis/fallout, but I'm out of the loop in the lending world.

 

[gourimoko]

I think there is a certain level of consensus that health insurance, the very concept of it, is repugnant. Healthcare in all it's forms, preventative or otherwise, should be paid for the by public at large - the healthy should care for the sick, anything less is inhuman.

Car insurance, well, it's expensive - but like Max said earlier in this thread, there are often instances where it is really necessary. For the average John Q. Taxpayer, it's exorbitant and needs to be reformed. Some type of bond or security issuance should suffice, not the need to spend upwards of $300/mo just to drive; mind you, for every month you drive - forever. The average 30 year old driver may have spent more than $200/mo for 12 years, or $28,000 - just to drive. Extrapolate that over 30 years and you get $72,000; and we're assuming only paying $200 for yourself, your wife, and your teenage kids; an extremely unlikely possibility. My point is that the cost of car insurance is equivalent of the cost of buying a house. Unlike owning a home, with insurance you gain no equity and you pay forever. There is no maximum you can pay, because you can always cause a 12-car pileup (as infrequent an event that is). Being that insurance is mandatory in most states in the Union, it must be considered a form of taxation. And as far as I'm concerned, if it's a tax, then it must belong to the public trust; in such an instance, we have the right to reform it via legislation.

Life insurance - I think I already said everything that needs to be said about that. Reform Social Security and implement some Republican proposals to expand the program by implementing private savings accounts similar to IRAs. Life insurance would then be mostly unnecessary, at least for the middle class.

 

[gourimoko]

Health insurance is not a scam. As nice is it to go to the doctor's and pay a $10 co-pay, that is not the purpose of health insurance. Max's wife, now that's health insurance. Without pulled risk, even Max :chuckles: would (presumably) have trouble putting together the payment. Less drastic, my wife giving birth would have cost $40,000 without health insurance--granted, she had a 38 hour labor and was on pain meds for 10 hours or so, so her charges aren't typical.

While society as a whole is paying, in any given year, more than their fare share, there will come a time when every single one of us will need it and will recoup the investment. What happens if we don't have health insurance? In situations like that of Max's wife, the hospital doesn't get paid. That happens enough, the system falls on its head.

Note, this discussion does not touch Universal Health. Universal heath coverage is, essentially, forced health insurance. We pay our premiums in the form of income taxes, the government acts as the insurer. In addition, it presumes that health insurance companies actually make good on their contractual obligations.

The statement 'Universal health coverage is, essentially, forced health insurance," is not generally true. The Obama and Clinton health care proposals are exactly that "forced health insurance," but they ensure that everyone can get affordable healthcare, regardless of their financial situation (everyone is covered). This is not really a socialized healthcare or a real universal healthcare program like say, the NHS. Socialized healthcare is vastly superior to what either Obama or Clinton has proposed; a single-payer system which eliminates the concept of private "health insurance," which as I've said in my previous post, is somewhat inhuman.

 

[Lee]

Health insurance
Mortgage Insurance is a scam. In the old days, you could get around paying it by taking a primary loan at 80% of appraised value and by covering the rest with a 20% downpayment or with a second mortgage. Rules might have changed with the credit crisis/fallout, but I'm out of the loop in the lending world.

Not a scam what so ever, MI (mortgage insureance) is there because their is a greater risk to the investor (end owner of the fannie mae or freddie mac loan) when the Loan to value levels go over 80%. The 2nd mortgage no longer existis. The best way to avoid it is put 20% down which most cannot afford. Just like any insurance, it is pulled risk. You are paying for others that have or will default. And before you say you wont, anyone can loose a job, and if you loose your job, you most likely could have trouble keeping up on your bills.

Now MI on a FHA (federal housing authority) loan is different. FHA is gurunteed to the investor, so if someone has a fha loan and defaults, the goverment (more specifically HUD) will pay any losses to the investor. So once again its a shared risk. In a FHA loan there is both upfront MI (currently 1.75% of the loan amount) and monthly MI (.55% yearly). This is how FHA remains completely self funded. No outside revenue needed to fund the program, all based off of MI.

No insurance is a true scam in theory, all though some insurance companies or agents have been known to scam the consumer. Insurance is a neccisity in order to pull risk and keep everyone safe financially.