It is interesting to watch insurance commercials. The life insurance television commercials are especially interesting. They openly prey upon your emotions of what can happen to your family if you die and you do not have insurance. This they hope will get you to purchase their insurance.
But take a step back and think about what insurance really is:
Yes, it is. You are BETTING that something WILL happen to you. The Insurance companies are betting that it WILL NOT happen to you. By using statistics, law of averages in effect, they know that a certain percentage of people will have X happen to them every year. They make money by telling you that if you pay a low $ amount every so often, and they get enough people to pay them that small amount, even when they lose the bet — and you have won — they will have made money. The math works out that it is more efficient and cheaper for you to pay them so much a month than trying to save money to cover the amount of money that you would need if X happened.
In other words, you pay the insurance now "betting" that you will have X happen to you this year and not 30 years from now when you would have had saved enough money to cover the expense for X.
Now most governments are self insured. They figured out that it is cheaper not to pay the insurance rates. They can do that since they have more cash to draw upon than most individuals. Most individuals cannot keep $50 thousand to a few million dollars in our checking accounts to pay for claims or unexpected expenses.
Now that you understand what the purpose of insurance now think about things that you have insured. Now think about the things you had no choice about insuring and being forced to purchase insurance.
Who forced you to insure those items?
In most cases the government, supposedly ourselves, passed laws stating that in order to purchase item X you HAVE to purchase insurance to cover the possible damages if things go wrong. Now remember according to statistics a certain amount of times things MUST go wrong.
You have to purchase insurance due to a law. What is that "forced insurance purchase" called when an individual forces you to pay money by threatening something worse if you do not?
This means that most insurance purchased is legalized extortion!
Now here comes the real annoying part.
The insurance companies KNOW that the possibility of what you are insuring against will occur and base their rates so that they make money even when it happens. Now when it DOES happen they then - remember they bet it would NOT happen and you bet that it WOULD - raise your "insurance" rates after they LOST THE BET!
They act like spoiled brats in this regard.
They also know you cannot do anything about them raising the rates since they had those laws passed oh so long ago stating that you must have insurance! Then they point to the same statistics saying that once you lost on insurance those same people now are more likely to have that same thing happen to them again.
Now if it does NOT happen to them again — do they refund the extra money they charged you?
A lot of banks act like insurance companies. They loan money expecting to make a huge profit and if the deal fails and it looks like they would LOSE money they then SUE those who they lent the money to and make that profit anyway! They bet, they lost and then sue to win back their bet anyway. All perfectly "legal" but not really honest.
Bonneville Power Administration, BPA, where I work at, had this happen to them. BPA made a deal that if a power plant was built they would purchase the power for 20 years.
The plant did NOT get built, but the bank then sued — AND WON — from BPA — the amount of PROFIT that the bank would have made had the plant been built.
Their argument went that they agreed to loan out the money — which they got back in full once the plant was cancelled from being built — on the assumption that they would earn that profit; this means that they should be entitled to that profit even though the plant was not built. They got, if I can remember correctly, 317 million dollars from BPA for their "lost" profit.
They for sure took all the initial loan money which they got back in full plus the profit they got out of BPA and loaned it out again.
Look up Tenaska Power Project and read about that Federal Project. (It will seem like you are reading it forever.)
I think insurance companies should not be allowed to raise your insurance rates till after they have lost their BET twice.
And if you never file a claim to collect money from them then they should refund some of the money back to you when you no longer need that insurance.
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