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Old 08-29-2017, 07:52 AM
 
48,975 posts, read 39,459,188 times
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Quote:
Originally Posted by Alonso Gil View Post
Yes it is. You can send the state $25,000 (whatever the liability coverage requirement is) and they will sit on it until you need it, buy an insurance policy, or move out of state. You can drop homeowner's insurance if you don't have a mortgage (very bad idea but it is an option). If you have a mortgage, the bank requires insurance because they don't want to have a loan on a burned-down house, because you will probably stop paying.

The reverse lottery is a good example. It needs just one tweak to it, though, which is that you can't say "I promise to pay" should you 'win'; like automobile self-insurance, you need to put up the money first. Then if you 'win', your money is gone. But would you really do this? Similar to dropping homeowners insurance on your house, who cares if you're ahead by 5% on average... is that worth risking your life savings?
Good discussion.

Considering that the losses paid out on auto insurance might be around 75cents on the dollar as a rough swag, taking the largest deductible you can stomach is indeed a long term positive economic play since you won't be wiped out and are saving some money.
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Old 08-29-2017, 09:08 AM
 
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Watch what insurance companies you do business with.

Some get kicked out of states for nonpayment of claims.

Run a check before buying.

There are 2 I know of that still owe for Katrina and got kicked out of LA. They are BIG names and advertise often.
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Old 08-29-2017, 11:00 AM
 
8,301 posts, read 3,466,952 times
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Quote:
Originally Posted by jimmy12345678 View Post
No this isn't a personal issue for me, as I live up north and haven't been affected by the hurricane.


As Leisesturm already pointed out, the word I should have used in my OP was "racket" instead of "pyramid/ponzi scheme".
Most insurance is a racket based on the asymmetry of knowledge between the carrier and the consumer. The carriers deal in large group demographics and if successful with profits, they knew more of the risks and costs of losses then their insured.
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Old 08-29-2017, 11:42 AM
 
Location: Shawnee-on-Delaware, PA
3,680 posts, read 3,262,911 times
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Quote:
Originally Posted by jimmy12345678 View Post
Can someone please explain to me how insurance is not a glorified ponzi scheme?

You fail to consider how many people drop insurance coverage without ever filing a claim, once the need for insurance has run its course.


I've had insurance on every car I've ever owned, totaling let's say 100 car-years (we have 3 right now, soon to be 4). Only two of those cars have been declared total losses due to crashes. The amount of money paid out by the insurance company for those 2 cars is way less than 100 years' worth of premiums.


Same thing with life insurance. When you get to the age when your mortgage is paid off and you're financially secure, you drop your life insurance. No claims, but the insurance company keeps the premiums you're paid for 30 years. Sweet deal for them, but not a Ponzi scheme.


With a Ponzi scheme, everyone is expecting to get paid. With insurance everyone is hoping not to get paid.
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Old 08-29-2017, 11:55 AM
 
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Actually All Insurance = Lotteries.

Insurance is like the lottery, the collective masses pay the unlucky few drivers (or lucky few Powerball winners).

The lottery doesn't pay the lucky jackpot winners; they take money from 99.999% of the ticket buyers and distribute that money (after they take a nice cut) to the 0.001% winners who luckily hit however many numbers they need to hit.

In the same way, GEICO doesn't actually pay the unlucky drivers; it takes money from the many drivers who don't get into accidents, to redistribute to the few drivers who do get into accidents. GEICO is just an intermediary that takes its cut and makes big money redistributing money from the many lucky drivers to the few "unlucky" drivers.
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Old 08-29-2017, 12:00 PM
 
48,975 posts, read 39,459,188 times
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Quote:
Originally Posted by foundapeanut View Post
Watch what insurance companies you do business with.

Some get kicked out of states for nonpayment of claims.

Run a check before buying.

There are 2 I know of that still owe for Katrina and got kicked out of LA. They are BIG names and advertise often.
I would caution about buying into state insurance rhetoric because it's often political grandstanding.

After Katrina, Louisiana in particular tried to completely re-write flood insurance case law with their own courts and judges to cover flood even though it was excluded since forever.

But, I'll keep an open mind because that would require a public announcement and you should easily be able to source your claim that Louisiana kicked 2 large insurers out of the state for non-payment but I have to tell you I'm dubious that was the case.
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Old 08-29-2017, 12:06 PM
 
48,975 posts, read 39,459,188 times
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Quote:
Originally Posted by fumbling View Post
Actually All Insurance = Lotteries.

Insurance is like the lottery, the collective masses pay the unlucky few drivers (or lucky few Powerball winners).

The lottery doesn't pay the lucky jackpot winners; they take money from 99.999% of the ticket buyers and distribute that money (after they take a nice cut) to the 0.001% winners who luckily hit however many numbers they need to hit.

In the same way, GEICO doesn't actually pay the unlucky drivers; it takes money from the many drivers who don't get into accidents, to redistribute to the few drivers who do get into accidents. GEICO is just an intermediary that takes its cut and makes big money redistributing money from the many lucky drivers to the few "unlucky" drivers.
Quick question, on a typical auto policy like you are describing just what do you think the profit margin is?
In other words, what is the typical profit on $100 of premium?

I'm just curious to hear what you think "big money" is for servicing all the policies, claims handling, computer systems etc. and then having to file rates with the state that sets what the profit margin can be.

On top of that, if you start losing money you have to ask the state for an increase and in some states they just say "no" because it's an election year. Oh, and you can't just stop writing policies then either lol.
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Old 08-29-2017, 01:04 PM
 
1,481 posts, read 597,067 times
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Once you reach a certain age, you need health/drug insurance. I don't care if it's a ponzi scheme or not. It works. I'm 70 and I have racked up more than $400K in hospital and pharmacy bills in the last 4 years. Medicare, drug coverage and secondary insurance paid for all but about $4K total. I have paid in about $6K per year in current dollars in premiums for my wife and myself for the past 40 years. But I got 66 years of premiums worth of bills paid in just the past 4 years.
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Old 08-29-2017, 03:35 PM
 
Location: Saint John, IN
10,647 posts, read 3,330,507 times
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Quote:
Originally Posted by bobspez View Post
Once you reach a certain age, you need health/drug insurance. I don't care if it's a ponzi scheme or not. It works. I'm 70 and I have racked up more than $400K in hospital and pharmacy bills in the last 4 years. Medicare, drug coverage and secondary insurance paid for all but about $4K total. I have paid in about $6K per year in current dollars in premiums for my wife and myself for the past 40 years. But I got 66 years of premiums worth of bills paid in just the past 4 years.


Exactly this!


My husband was in a huge accident 3 years ago and totaled his car (he fell asleep at the wheel). Not only did he total his car, but he has had 4 reconstructive facial surgeries. Auto insurance paid out $35k and health insurance to date has paid out $1.3Mil. I can say with all certainty that we have NEVER paid out that much in premium. However, I have an Aunt who is in her late 70's and has never been in a car accident and has never even had a surgery. She's in perfect health. She has been paying premiums for insurance for 60 years and has never really used it. That's where the money and profits come from!
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Old 08-29-2017, 05:37 PM
 
Location: Raleigh
8,010 posts, read 5,312,848 times
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Quote:
Originally Posted by bobspez View Post
Once you reach a certain age, you need health/drug insurance. I don't care if it's a ponzi scheme or not. It works. I'm 70 and I have racked up more than $400K in hospital and pharmacy bills in the last 4 years. Medicare, drug coverage and secondary insurance paid for all but about $4K total. I have paid in about $6K per year in current dollars in premiums for my wife and myself for the past 40 years. But I got 66 years of premiums worth of bills paid in just the past 4 years.
In a nutshell you have described why THE ACA is doomed to fail. Many are paid but few are contributing.
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