What's up with insurance (of any kind)?

Discussion in 'Community' started by ravenvii, Apr 6, 2005.

  1. ravenvii macrumors 604

    ravenvii

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    Mar 17, 2004
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    Melenkurion Skyweir
    #1
    Note: I'm not talking about one-time payment insurance such as the extended protection at Best Buy or the such... I'm talking about health insurance, homeowners insurance, that kind of insurance.

    I don't see the point of them. Why do you get them? They force you to pay, then basically tell you not to claim anything, because one claim will go on your records, and make you pay even more, and it all just ends up a scam.

    Why not make your own "insurance" account at the bank, and put some money in there every month? You can take it out for emergencies - health, home, etc - and you'll actually save money - and alots of it - because you don't have to deal with the insurance ********. Just wondering what's the benefits of getting insurance?
     
  2. Sun Baked macrumors G5

    Sun Baked

    Joined:
    May 19, 2002
    #2
    With auto and homeowner's policies, when it's a requirement of the loan -- don't pay the insurance and the loan could very well be deemed in default, even if you are current in the payments.

    It's there to make sure the loan is payed (or the asset is repaired) if the property is damaged/destroyed, which won't happen if you don't have insurance.

    So it's not a scam to them.

    Medical Saving Accounts are a step in the direction you are talking about, putting forth money every month and using that for the "small things" while the catasrophic insurance is there in case you end up in the hospitals for anything beyond a "visit to the gift shop." Of course this also means learning to shop for non-urgent health services, which people tend not to do.
     
  3. Timelessblur macrumors 65816

    Timelessblur

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    Jun 26, 2004
    #3
    well you make a claim that means that you prouble costed them money. You pay them to take care of you if something goes wrong. For cars I going to assume you dont have 50k for damage then a over 100k for medical expences so if you wreck some car and do all that damage can you afford to cover them. Heath inssures does not go up or down based on you claims it more or less a flate rate. They can not legel drop you or raise you rates. You have to go to the hosiptel for major surgery going to cost 300k dont have it oh great now you dead or you are broke for the rest of you life.
    Home owners I really dought you have the value of the house in the bank so if something goes wrong you now can not pay off your loan on the house. Besides you are required by the bank to have it for them to give you the loan. You are paying with fire by not having it.

    For me personly I know for a fact that for auto inussures I have taken out a lot more than I put in. I really dont htink I put in 60K in to it (the one wreck I had end up costing over 60k when it was all said an done because the lady sued me for medical which the inssurence company had to pick up the tab. Oddly enough the law suit was for the max my inssures was willing to pay not more not less the exact max.) My rate increase was less then 20 a month and in the end the increase only add a little over 1k by the time that I went back to the clean record rates.

    You buy it to proctect you self incase something major goes wrong. You are gambling that something will go wrong that will cause more to fix than you put in. Inssures compainy is gambling the other way.
     
  4. aloofman macrumors 68020

    aloofman

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    Location:
    Socal
    #4
    It's really about stability and peace of mind. A major disaster that destroys your home would leave you in dire straits without homeowner's insurance. You would have no home AND still have to pay off the rest of the loan. Health insurance is also about peace of mind. Many people without health insurance do just fine, as long as they never get sick or injured. But if you do, it could ruin your financial future completely. Insurance is really about paying a relatively fixed amount to spread the risk among a large number of people instead of assuming all of it yourself.

    Now, I have some quibbles with the pricing of some insurance. It's disgusting that, as a single twenty-something male, I pay a relatively high amount for auto insurance, even though I've never caused an accident or received a single moving violation. And it's also true that a lot of people spend money on insurance they don't need. As a person with no dependents, there's no reason for me to buy life insurance, for example, but some people do that. But this is a matter of insurance companies making more profits, not whether the concept of insurance is valid.

    If you don't like this "everybody pays a little so a few people don't pay a lot" concept, then you're out of luck. Every government raises revenue the exact same way. The feds paid part of the cost of a bridge in another part of the country that I'll never use! It's an outrage! Society's costs have to be spread out to prevent too many people from falling through the cracks.
     
  5. Applespider macrumors G4

    Applespider

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    looking through rose-tinted spectacles...
    #5
    Insurance is a gamble on a calculable risk for both you and the insurer tho of course the insurer is the one who'll be aiming to make the cash and so get the better side of the deal.

    I was robbed last year and the thief got my cell phone/iPod/watch/purse/bag - probably about £800 all in. Without insurance, I'd have been even more depressed and probably wouldn't have repurchased it all. As it was, I paid an excess of £50 and had a new generation iPod, upgraded phone and cheques within a week. And my premium which came in 6 months later was £20 lower.... go figure! Then again since it was my only claim in 7 years with them, I guess they figured I wasn't trying to take them.
     
  6. MongoTheGeek macrumors 68040

    MongoTheGeek

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    Sep 13, 2003
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    Its not so much where you are as when you are.
    #6
    Health insurance is like going to a casino and betting that bad things will happen to you. In my case it paid off. Lifetime I've paid maybe 25,000 in health insurance. A few years back I blew through that in a summer. More recently I blew through 5 times that.

    Insurance isn't that useful for the little things in life. It usually doesn't make sense for doctors visits but it really helps for the big things.

    Other forms of insurance are much the same. Yes, you come out ahead if you just squirrel money away instead of getting car insurance. But what happens if you wreck 6 months into a new car when you've only saved $300 and 50 times that in car payments?
     
  7. Drgnhntr macrumors regular

    Joined:
    Nov 4, 2004
    Location:
    San Diego
    #7
    I have a few problems with insurance. One is that it is a requirement of most if not all loans. Escrow was delayed on my current house, because I couldn't find a company to insure the house. It had a single water damage claim ~5 years before I bought it. I had to bend over backwards before they would allow me to pay them for provisional insurance so that escrow could close. Then once I got the home I was expected to do a number of renovations (unrelated to the claim) to keep the insurance. The insurance company knew that what I needed from them was required and they, in my opinion, abused that advantage.

    My grandmother, right after my grandfather died, was faced with the upkeep of her house. She used her insurance the way she thought it would work, when bad things happen call them. She have 2 or 3 claims over the next year or two for around $500 a piece. They dropped her.

    After all the stories I have heard and threats of my own coverage being dropped, I would not even contemplate calling a claim on my house unless it actually burned down. I fully expect to be dropped at any moment and that does not grant me a whole lot of piece of mind.

    Then there is auto insurance. I pay more than my wife, and she has a much newer car than me. I have never caused an accident or received any moving violations. Again, this insurance is required, so what choice do I have other than to pay it? I also feel the insurance companies are not really the most efficient companies. My wife had a broken windshield covered under comprehensive and in the end it cost over $2000 to fix. Almost three times the estimate! It wasn't my money so I didn't have a say, and the insurance company was okay with it. Such a waste.

    Sorry for the long post, (as it gets longer :rolleyes: ) but I also wanted to mention that in California the minimum liability insurance is $35000. So if you wanted to you can set aside $35000 into a bank account to satisfy your auto insurance requirement.
     
  8. Roger1 macrumors 65816

    Roger1

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    Jun 3, 2002
    Location:
    Michigan
    #8
    I had an insurace problem a few years ago. I bought a house, the insurance company covered it no problem. A couple years later, I get a note from them telling me they are going to drop me if I don't make some fixes within 30 days. I call my agent, he said 'Oh, yeah, I forgot to tell you'. So I made the fixes (the problems were there when the house was insured). When I was due to pay my premium, it shot up from around $450/yr to almost $800/yr! I asked why, and the long winded answer boiled down to the fact they didn't make enough money the previous year. Guess who found a new insurance company?

    edit: Oh, yeah, the problems didn't bother the insurance company when I bought the policy. Go figure.
     
  9. strider42 macrumors 65816

    strider42

    Joined:
    Feb 1, 2002
    #9
    With auto insurance in California, you ahve the right to post a $30,000 in leiu of having insurance. Problem is, total a new lexus and you'll owe more than the bond (plus you have to have 30k to put up in the first place).

    If you don't want insurance, don't get it. But I suspect that if you got sick, you'd just end up having the taxpayer foot the bill because medical costs are crazy expensive, or you'll end up bankrupt from a car crash that leaves someone seriously injured and they can't collect any money from you. And don't forget your car insurnace company will fight for you with their lawyers, since they dont' want to pay. Insurance is about responsbility to society too (I don't want my tax dollars subsidizing you and the damage you cause or problems you have. This is why car insurance is mandatory), but most importantly about protecting yourself and your family from absolute financial ruin. Unless you can afford a 100 thousand dollar bill in the mail, you need insurance (and if you can afford it, you need even more because then you're just a target for lawsuits)

    That's not to say the insurance companies don't have a lot of room for improvement too. They shouldn't be able to drop you for normal claims, they shouldn't raise rates so much when you do file a claim, there needs to be more done to reign them in. That doesn't mean insurance isn't an absolute necessity.
     
  10. plinden macrumors 68040

    plinden

    Joined:
    Apr 8, 2004
    #10
    Let me see - I've been to the doctor twice in the past ten years for minor checkups, so it wouldn't be worth my while being insured, but ...

    ... in the past four years, my wife and I have gone through two pregnancies and one miscarriage, resulting in approximately 25 prenatal OB/GYN visits billed at about $150 each (she paid $10 copay), three hospital stays (billed at approx $20,000 each), and 12 postnatal checkups for the kids at the paediatrician (another $150 each - again $10 copay)

    So it's definitely been worth our while to have health insurance.

    Do you have the discipline to put aside $X per month to cover possible emergencies? How much do you set aside? What's the maximum amount you would expect to need - $50,000, $100,000, $250,000? Wouldn't it be too tempting sitting on $50,000, especially if you haven't actually needed any medical treatment recently - and especially when the dual core G4 PBs come out?
     
  11. Drgnhntr macrumors regular

    Joined:
    Nov 4, 2004
    Location:
    San Diego
    #11
    The only thing with that is that all the insurance I have is required. My home, auto and medical are required by my bank, state, and employer. I have life insurance at the urging of my wife.

    I agree that insurance does have its uses. I think if it wasn't required they would have to do more to get and keep customers. However, the costs from those without insurance will end up on taxpayers like you mention.
     
  12. ravenvii thread starter macrumors 604

    ravenvii

    Joined:
    Mar 17, 2004
    Location:
    Melenkurion Skyweir
    #12
    The majority of the insurance defense is on automobile insurance.

    But if I don't have, and never will own, a car?

    And if I plan to buy a house outright instead of loaning it from the bank? (It can indeed be done - just live in a apt, and save up). And self-discipline to save up $100,000 in the bank? Some people don't, but I can, and do have the displine. Save it up, put it in there, and forget about it. When a situation do come up where I need the money, I use it, then save up again until I get to exactly $50,000, and then forget about it again.

    For example, I'm saving up for law school. I may (and probably will) get scholarships, grants and if needed, loans. But I'm still saving up. The money is readily available to me - I can buy a dual 2.5 GHz PowerMac with a 30" cinema right now if I like. But I don't, because I simply assumed that money is not for me to use. I eliminated it from my budget, and $200 every month automatically goes into the pool, no questions. I act as if it doesn't exist for me to use.

    Temptation? At the beginning, yeah. But you get used to it. You get used to knowing it's there, and at the same time knowing it's not available to you.

    Anyway, I'm going off on a tangent - and in my own thread too - and I'm young and inexperienced as you guys will probably think, so thanks all for the information on insurance - valuable knowledge. :)
     
  13. Sun Baked macrumors G5

    Sun Baked

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    May 19, 2002
    #13
    If you live in the US you are missing out on the time value of money equation by simply putting your money away.

    Sometimes it's cheaper to rent an apt, and sometimes it's cheaper to buy.

    Paying money towards an apartment is a zero gain, while a mortgage nets you some deductions and builds equity.

    When you give that money to an apartment owner: you are paying their mortgage, insurance, and a small profit.

    So you are still paying it, just for someone else.
     
  14. EJBasile macrumors 65816

    EJBasile

    Joined:
    Apr 20, 2004
    #14
    Insurance....
    To much $$$

    Try insuring 2 Range Rovers and a Mercedes as well as medical malpractice, plus medical insurance, homeowners insurance, etc.

    Well, it is my fault for have 3 expensive cars to insure but its a lot.

    Property taxes in my town are outrageous. Right now my property taxes are over $12,000.
     
  15. Chip NoVaMac macrumors G3

    Chip NoVaMac

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    Dec 25, 2003
    Location:
    Northern Virginia
    #15
    Not to mention the new wrinkle, even calling your agent to inquire about making a claim can cost you "points" on their damn rating system.
     
  16. Chip NoVaMac macrumors G3

    Chip NoVaMac

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    Location:
    Northern Virginia
    #16
    I agree. Back in 9/01 I had about $8000 worth of camera gear stolen from a car (lucky strike for the thief, since they went after an exposed book-bag left by my lover). So I paid the insurance company about $3K in premiums, and they paid me back the $8K. Not a bad trade off, when in fact I was paying for the protection of my home.
     
  17. aloofman macrumors 68020

    aloofman

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    Socal
    #17
    If you have the discipline and earning power to do that, more power to you. But paying for a home in cash doesn't necessarily mean you'll come out ahead. At current interest rates, you could get a mortgage instead and invest the difference. Assuming they aren't poor investments, you would make more money in the long run AND you'd own a home sooner.

    Having said that, in many parts of the U.S., a housing bubble is inflating the price of homes. So it's probably not the best time to buy.
     
  18. Coca-Cola macrumors 6502

    Joined:
    Dec 10, 2002
    Location:
    WA
    #18
    I use the Pickle Jar Plan

    I use the Pickle Jar Plan. Whenever I develop a ghastly illness, out go the pickle jars. I place them at convenience stores and grocery checkouts.

    Health insurance would be awesome. However I can no longer afford it and my job does not offer it. I currently require hundreds of dollars a month in medication. I need antidepresants. I stopped using them because I can't afford it. I have stopped using my asthma medicine, because I can't afford it.

    Most nights I suffer breathing diffuculty. I am forced to use Primatene way too much and it's dangerous.

    Good news is, if things get worse, there is always the Pickle Jar Plan.

    I think it is time for national health care.
     
  19. makisushi macrumors 6502

    Joined:
    Jul 15, 2004
    Location:
    Northern VA
    #19
    Well, then I guess you won't have to worry about car insurance.

    I think you mean "borrowing it" instead of "loaning it," counselor.
    There are other factors to consider when saving up to buy a house free and clear. 1. Inflation, you will need to save money at a higher rate than the rate of housing appreciation. 2. if you take out a loan to buy a house, you can usually invest the money that you would have used to buy it out right, and make a higher return on it than the amount of interest that you are paying on the loan. 3. income tax deductions!

    I pay about $1500 a year for home owners insurance, and if the roof of my house gets blown off, that is an easy $35,000 repair. hmmm....1500 a year, or 35000 at once....
    If i didn't have homeowners insurance and had to pay 35000 out of my pocket, when i could have just paid 1500, I would be kicking myself.

    Good for you. Give yourself a pat on the back.
     
  20. Paul O'Keefe macrumors regular

    Paul O'Keefe

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    Jan 23, 2005
    #20
    Deductibles should be illegal

    What I don't understand is why decuctibles exist. Why should a person have to pay any amount, afterall you are paying for insurance? And for alot of things after you use the insurance for something your rates go up... so as you end up paying more for the thing anyway as if you didn't have any insurance.
     
  21. Sun Baked macrumors G5

    Sun Baked

    Joined:
    May 19, 2002
    #21
    Re: Deductibles should be illegal

    Decuctibles exist to keep people from putting in a bunch of small claims.

    Basically saying that anything under a certain amout is the sole responsility of you.

    Every time the insurance company goes to a higher deductible level, they know there are going to be a lot fewer small claims at or near the deductible.

    ---

    Look what happened when HMOs became popular, for $5 you can go and get anything you want.

    Versus the people who were required to pay 20% of their doctors visit at the time.

    Which group of people became the biggest consumers of health care?
     
  22. ravenvii thread starter macrumors 604

    ravenvii

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    Mar 17, 2004
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    Melenkurion Skyweir
    #22
    I ain't your counselor, makisushi, I'm just bringing up scenarios where I would like to know why insurance would be important. That's all.

    On your "yoru house blows off" comment... Yeah, you would probably be hugging yourself for having insurance, but the next month, see that sudden raise in premium? If your insurance is actually flat-rate, then I would agree with you 100%, insurance is a good thing. But what I don't get is how insurance companies gouge you with premiums for the tiniest of reasons. Those are the people ripping you off, not those who go by flat rates.

    Which, I guess, means I'm convinced that health insurance is useful (thought it wasn't flat rate... shows what I know).
     
  23. jeremy.king macrumors 603

    jeremy.king

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    Jul 23, 2002
    Location:
    Fuquay Varina, NC
    #23
    You are forgetting a large part of insurance programs. LIABILITY.

    When someone trips on your front step and becomes disabled - who do you think gets sued for lost wages/pain and suffering/etc? You may want to save a tad bit more...

    Insurance, in my opinion, is simply coverage for unforseen circumstances. You seem to have your entire life planned, so I say go for no insurance - that would be most wise.

    Finally my home owners cost me about $750/year so at that pace, it would take me 350 years to save up enough money to replace my personal possesions and home just in case my house burns down. Since I can't save $260K anytime soon, I'll stick with my homeowners policy and just sleep better knowing that "I am in good hands" :)
     
  24. rainman::|:| macrumors 603

    rainman::|:|

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    Feb 2, 2002
    Location:
    iowa
    #24
    My dad came up with the best explanation I've heard: You're betting the insurance company that you won't (get sick, have an accident, die). Of course they'll do everything to hedge their bet. Including making it difficult for you to file a claim. But insurance, unfortunately, is necessary. Insurance itself allows the cost of healthcare to rise an unbelievable rates, if we all had to pay out-of-pocket, everything would be much cheaper. But it also allows medical science to run at an unbelievable pace, because they're getting so much money.

    "Always buy life insurance, son, because it's the insurance company betting you're not going to die. And that's a bet you can take."
     
  25. AppleMatt macrumors 68000

    AppleMatt

    Joined:
    Mar 17, 2003
    Location:
    UK
    #25
    Insurance fraud, that's where it's at.
    Everyone wins.

    AppleMatt
     

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