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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: bentway who wrote (160212)	10/26/2008 3:02:03 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

Well I think that when you complain about insurance and insurance companies you can usually get a lot of agreement from just about everyone. For the most part, people hate insurance because within the concept of insurance there is what I like to call heads you win, tails I lose. If you pay your premiums and never collect you feel screwed, if you have to collect you never find that the insurance makes you "whole", certainly not as whole as you would have been had nothing happened to you. Shared risk always invites moral hazard, and creates an incentive trap for people who opt in. So in order to have premiums pay off the unscrupulous scam the insurance companies and when the companies push back it usually snags the innocent victims with valid claims. That said, government insurance programs have all the same flaws as those in the private sector with lower capitalization requirements. The biggest difference, they are much more difficult to opt out of, mostly impossible. I can fire my insurance company or cancel my policy if I'm unhappy and I can even sue them when they fail to live up to promises. Try doing any of that with the government run counterparts. In a free society no one should be forced to buy any product even if it is from the government ...which I'm sure has all our best interests at heart. I have a couple of good friends who handle disability claims at SSA. Every single claim, short of that made by a blind person, gets declined when they apply for disability. Some worthy souls apply six times before being accepted which means scam artists who are persistent are sometimes more likely to earn the distinction. The worst thing about it is that once you get it, you are trapped in it because the draconian rules the Feds were forced to put in place to discourage widespread fraud discourage any attempts to bridge to some sort of work you might be able to do with some sort of assistance or rehabilitation. Still, insurance is useful in protecting assets. Especially if you use insurance to cover the catastrophic but less probable event, instead of what most people use it for, to cover the lower cost more probable event (dollar swap insurance I like to call it). Self insure the regular more probable risks and use insurance for the least probable but catastrophic and you can protect your assets with insurance without having it destroy your ability to build wealth in the first place.