Is Insurance A Scam?
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June 26, 2023

Is Insurance A Scam?

I’ve often wondered if insurance is a scam or necessity? Having purchased many policies during my lifetime it seems insurance is both, a scam and a necessity. Insurance companies and investors get richer, policy holders get screwed whether or not they file claims. This is the normal pattern for all types of insurance.

Insurance is a betting game that the policy holder never wins. The bet is you purchase insurance policies just in case something happens, that’s why it’s a necessity. You pay the premium monthly and that secures your part of the payout if you file a claim. The insurance company get your premium, places it in a pool with other policy holders, invests it and makes interest on your premium payment. If you file a claim the insurance pays the claim from the pool of policy holders up to the limit of your policy. It’s very basic and simple. If you file no claims during the policy period the insurance company keeps all the premiums you paid plus the interest they received on the payments, you get nothing. If you did file a claim, multiple claims or a high cost claim the insurance company might pay the claim or claims up to the policy limit. To collect on the claim or claims the company runs you through the ringer trying not to pay the claim because they do not want to have to pay out. They have loopholes and exemptions in the policy that basically favor them not to pay the claim. These exclusions are included in the policy but a lot of times are very vague and up to interpretation, That’s were the attorneys step in and cause more costs. In the end if they pay the claim or claims they usually cancel your policy to prevent further so-called “losses.” The amount they pay out never really amounts to the amount you paid in. That’s the scam, they never lose.

The companies have a great PR machine that always makes them sound like the victim of fraud, disasters, economy or anything else they want to blame. They are not victims they are the hawks that prey on people because most want to try to protect what they own because of hard work. Insurance rarely pays out quickly or gives the actual value for items because they do not want to part with their assets. It is like pulling teeth to have them pay for the full actual loss and in a timely manner. That is why people hire lawyers to try to push the insurance companies to pay the claims. Once again the policy holder gets screwed because not they have to pay the attorney fees which reduces the amount of the claim the receive. The insurance companies build the cost of their legal fees into the monthly premium you pay. Once again they don’t lose, you have actually paid for the attorney that will be fighting against you, It’s a scam, you lose again.

Health Insurance, Auto Insurance, Life Insurance and others are all stacked against you.

Health insurance is purchased because the cost of healthcare is astronomical. This in a way is actually caused by insurance companies. You pay your premium and they pay very little or deny the claim because you don’t use their network. In emergencies you don’t have a choice to choose the network or doctor. Then the first of the year your deductible is reset and you have to start from scratch. For some that could be at least $5,000.00 or more per year and double that for a family. Once again they get the money and you lose on services.

Auto insurance is purchase in case of an accident or possible theft. When you file a claim for a total loss they rarely pay you the full value of the vehicle. They are also the ones that decide to repair the vehicle or classify it as a total loss The fix is in and you lose.

Life insurance is purchased to plan for the future. You make payments for a future payout after your death. For some they can no longer continue the payments so they decide to cash out and surrender the policy. With Whole Life policies you are charged fees for managing the policy. If you have to cash out or surrender the policy you never get anything close to what you paid into the policy. All the management fees are subtracted from the total and the payout is a fraction of the premiums paid. You basically have paid the company to take your money. Term Life is pure theft if you don’t die. You pay a premium for a specified term and you get nothing back when the term expires. You lived, so the insurance company celebrates with the profit. You do get one thing out of surviving a term life policy, you get screwed financially.

Other insurance is purchased for a variety of situations and a lot of times these situations are caused by lawsuits. One insurance is for Product Liability. You can not take a chance selling a product to the consumer without Product Liability insurance. Thanks to the lawyers, a lot of good products never make it to the market because the inventors can’t afford the insurance. Unfortunately, once again due to shady lawyers, one lawsuit even for something minor, the inventor or seller is wiped out.

People will say the companies take a hit every time they pay a claim and because of fraud. Wrong. The insurance companies have such a large pool of policy holders that the pool pays for the claims of others. It is a giant pyramid just like Medicare. The young ones pay for the older ones making claims. The bottom always pays for the top. Another point is insurance companies purchase insurance for a loss, it is a giant circle.The insurance industry always claims to be the victim, I don’t believe that either. Insurance companies pay dividends to stockholders and Wall Street. If they were victimized they would have profits to pay dividends.

The dilemma for all of us is the we need insurance because we can afford to absorb the loss of what we own. We’ve worked too hard to obtain what we have and in a blink of an eye it all can be lost or in the case of health it could possible hurt or kill us. That’s why insurance is a necessity. The industry is stacked against us but unless we are extremely rich or like to gamble with our lives we have no choice.

That’s An Old Timer’s Opinion.

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©2023 James Colozzo, All Rights Reserved

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