Poll: Is insurance a scam?

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  1. #41
    Insurance is just a safety net, like many of the public services you also invest in through taxes.
    Many things you pay for, you will never need. Sometimes insurance is just a scam, like alien abduction insurance, but for proper threats , and properly regulated by the government, they are really good to have. Most people can't afford a new house if theirs burn down.
    Mother pus bucket!

  2. #42
    The Undying Kalis's Avatar
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    Quote Originally Posted by Benitora View Post
    Insurance is what saved my family's home.

    We had a large fire break out in a part of the house that managed to destroy roughly 40% of the house, and with ashes and such being in the rest of the house, we could not live there for 2-3 months.

    We where saved by the insurance company, despite us not having the "correct" form of insurance to cover house fire. They pretty much bailed us out of a huge bill that we couldn't possibly ever afford.

    Here in Norway at least, from personal experience, never had a problem with the insurance company ever trying to screw us over.
    I’m a commercial insurance broker, I’ve had grown men burst into tears and hug me because I got their claim payment approved, meaning the company they spent their life building can carry on.

    It’s a boring job, but it has its good moments.

  3. #43
    The Unstoppable Force Gaidax's Avatar
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    It's a "scam" until you suddenly need it, my mother is pretty old and she was paying insurance many years - waste of money, right? Yet several years ago she needed a pricey operation and only because she had that insurance most of the costs were covered and she had to pay pittance compared to original cost, especially because we chose expensive private hospital with all the bells and whistles and a proper, veteran surgeon, because I won't be having operations in frikkin' public hospital by some kids who just got out of uni.

    Now you may ask, do the savings cover the expense over the years? That I don't know, but even if they don't add up, it's still much better than getting a sudden huge shock expense, while on the other hand time all those monthly payments are almost unnoticeable.

    Same applies to many other things, of course it does not mean you have to have insurance for EVERYTHING, but it's basically calculating chances - I won't have insurance for something like damn piano falling on my head on a street, but it is certainly a good idea to get insurance for leg/arm breaks and such injuries, which can happen. I do also suggest, if you have a family, to get death insurance, naturally it won't help you, but if you die your family at least will be financially sound. Talking from bad experience here, my father did not have it, while he was the family bread winner and he died when I was quite little and it fucked us over BAD. I would not wish my family to have that experience, so I have one.

    Naturally I do not pick that one where family gets gazillion bajillion bucks for which you pay crazy monthly fee, but some nice tradeoff fee with reasonable insurance, you can have pretty cheap plan there that will give payout that is more than enough to get by and get kids up to speed decently in case the worst happens. Naturally I am not planning on dying, but shit happens, I bet all those US shooting victims did not plan on dying either and yet some asshole finished them off.
    Last edited by Gaidax; 2017-11-13 at 01:13 PM.

  4. #44
    i have always felt like its a scam.

    pay a monthly fee then when you need it you have to jump through hoops to get help, OH and you have to pay a deductible.
    No sense crying over spilt beer, unless you're drunk...

  5. #45
    Depends. When I bought my first car i insured that thing ASAP(also had a friend help me raise it's insurance value so I'd get bigger payoffs). Over the 3 years I had it I paid 700 euro or so total.

    In return I got around 2.5 since car got hit by a hailstorm, i caused a minor accident but they still paid up, also got my bumper trashed twice by this crazy lady next door that can't drive to save her life.

    So yeah, depends on how your luck is.

    At the same time my sister bought a car a year later, had her car in an underground mall parking space during that same hailstorm and never got scratched at all so she paid 600 euro over 3 years for nothing.

  6. #46
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    While insurance scams do exist, no, insurance in general is not a scam.

    - - - Updated - - -

    Quote Originally Posted by TehTemplar View Post
    At the same time my sister bought a car a year later, had her car in an underground mall parking space during that same hailstorm and never got scratched at all so she paid 600 euro over 3 years for nothing.
    Even if you never claim, insurance still gives you peace of mind. I don't know about you, but I value the health of my mind

  7. #47
    Void Lord Doctor Amadeus's Avatar
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    Quote Originally Posted by Danner View Post
    It's risk mitigation.

    A new bike costs $500.
    I own a bike, but I worry it might get stolen some day.

    I could buy a bike insurance. It means that if my bike is stolen, I get a new bike from the insurance company. Sweet!
    The insurance company looks at rates, and find that 10% of all bikes are stolen, annually.
    So they charge me $55 a year for a bike insurance. That is their rate where they cover their losses, and still make some money.

    I can buy that insurance.
    Or I can save up $50 per year towards an "in case my bike is stolen" fund.

    Assuming I'm just as often hit by a bike thief as everyone else, it is a better deal for me to save up the money.
    Insurance isn't a good deal compared to being self-insured. You always have to pay a markup to the insurance company.
    Over a lifetime, maybe my bike gets stolen maybe 5-6 times. If I paid for insurance in that lifetime, I would pay for 7-8 bikes.
    Basically - insurance isn't worth it, on average.

    --

    But - a new house costs $500 000.
    I own a house, but I worry that my house will burn down.

    I could buy a house insurance. It means that if my house burns down, I get a new house from the insurance company. Sweet!
    The insurance company looks at rates, and find that 0.5% of all houses burn down, annually.
    So they charge me $3000 a year for a house insurance. That is their rate where they cover their losses, and still make some money.

    I can buy that insurance.
    Or I can save up $2500 a year towards an "in case my house burns down" fund.

    Assuming I'm just as often hit by a house fires as everyone else, it is a better deal for me to save up the money.
    But unlike that bike, I can't actually afford to buy a new house in case the old burns down, unless I saved up the vast majority of that house value already.
    It's just no way I can causally dish out $500 000 in case of a house fire!

    So I pay for that house insurance. It costs me $500 / month in markup, that I otherwise wouldn't have had to pay.
    But it removes the risk of me having to live on the street in case of house fire.

    That is the value of insurance. Having insurance means I don't have to casually dish out far more money than I have for an unexpected expense in case my house burns down.
    Had I casually had $2 billion in the bank, insurance would just be an unnecessary expense though. It would have made more sense for me to just save that insurance money and buy a new house in case the old burns down. Because I wouldn't had any issues with buying a new one if I needed to with that kind of money in the bank.

    Yeah I get what you mean but it seems like insurance has become part of everything from Best Buy to Phones sorry I mean service protection plans.

    You know what I mean you go out buy a big item and the pitch comes like your bike. And you hit on it too what is the real likely hood I’m going let anything happen to my item. Still I’ll have to pay a deductible anyways.

    Unless Minnesota gets hit by an earthquake I’m covered. However if a 1 in 20 to 30 year tornado hits if I don’t pay a bit more I’m screwed. That’s what I’m getting at.
    Last edited by Doctor Amadeus; 2017-11-13 at 01:20 PM.
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  8. #48
    The Unstoppable Force Super Kami Dende's Avatar
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    Quote Originally Posted by Quasar911 View Post
    Yes and No... some countries like New Zealand and Australia, it is not compulsory to have car insurance
    pssst.. Yes it is, It's called Compulsory Third party insurance.

  9. #49
    The Undying Kalis's Avatar
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    Quote Originally Posted by Mall Security View Post
    Unless Minnesota gets hit by an earthquake I’m covered. However if a 1 in 20 to 30 year tornado hits if I don’t pay a bit more I’m screwed. That’s what I’m getting at.
    If it is optional cover, then you weigh up the risk and decide if it worth adding that cover onto the policy.

    Some people may want bare bones insurance, some a fully comprehensive one, having options is to cater to the buyers preferences.

  10. #50
    Brewmaster Mystrome's Avatar
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    No, insurance isn't a scam. It's a social structure. A safety net.

    People, however, are often scamming the insurance with faulty claims, which is the real scam since everyone else paying for insurance will see their fees go up if the company has to pay out.

    And then there are insurances that are simply not worth it. For example, phone companies trying to sell you a phone insurance with that new fancy phone you just bought. In most cases that shiny new phone is already covered by your home insurance (even if you lose/break it not at home). Double insured only means that you pay the fee twice, you won't get 2 new phones.

  11. #51
    Quote Originally Posted by Mall Security View Post
    Yeah I get what you mean but it seems like insurance has become part of everything from Best Buy to Phones sorry I mean service protection plans.

    You know what I mean you go out buy a big item and the pitch comes like your bike. And you hit on it too what is the real likely hood I’m Hugo let anything happen to my item. Still I’ll have to pay a deductible anyways.

    Unless Minnesota gets hit by an earthquake I’m covered. However if a 1 in 20 to 30 year tornado hits if I don’t pay a bit more I’m screwed. That’s what I’m getting at.
    Rule of thumb:

    If you can casually afford to buy a new thing in case the old breaks, then insurance is worthless. All you are paying is a markup to the insurance company.

    So say no to things like GameStop's 'game protection'. If you break your game, buy a new one instead. It's cheaper on average, over time. And if what you just bought didn't work in the first place, that's not an insurance issue. That's a reclaim issue. Which is free under most laws I know of. No point in paying for rights you already have.

    As for stories like "your insurance only covers fires from arson, electrical installations and electronic applications, spread from neighbouring buildings on fires, and wildfire. It does not cover fire from christmas tree lights as they are neither electrical installations nor electronic - sucks to be you"....

    ... take the case to the news, tearfully explain how [name of company here] scammed you.

    Watch the company turn around faster than a compass at the north pole.
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  12. #52
    Void Lord Doctor Amadeus's Avatar
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    Quote Originally Posted by Raelbo View Post
    While insurance scams do exist, no, insurance in general is not a scam.

    - - - Updated - - -



    Even if you never claim, insurance still gives you peace of mind. I don't know about you, but I value the health of my mind
    Peace of mind yes a feeling like a drug. You’re only so secure.
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  13. #53
    Quote Originally Posted by Mall Security View Post
    No but I’m sure everyone else does who didn’t.
    That does not make a scam though. If you invest in bad stocks and they drop, you did not get scammed, you just made decision that in retrospect turned out to be unwise. If no one had ever won the Lotto or gotten any claims from insurance it would be a scam, but clearly people have benefited.

  14. #54
    Void Lord Doctor Amadeus's Avatar
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    Quote Originally Posted by Kalis View Post
    If it is optional cover, then you weigh up the risk and decide if it worth adding that cover onto the policy.

    Some people may want bare bones insurance, some a fully comprehensive one, having options is to cater to the buyers preferences.
    I want to be covered for it all damn it lol.

    Then I’m told about the act of tree squirrel coverage. One chewed through a fucking line got zapped burned down a guys house. I get told that even as a joke I’m checking to make sure I’m covered. I just want to be covered!

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    Quote Originally Posted by Zogarth View Post
    That does not make a scam though. If you invest in bad stocks and they drop, you did not get scammed, you just made decision that in retrospect turned out to be unwise. If no one had ever won the Lotto or gotten any claims from insurance it would be a scam, but clearly people have benefited.
    Would you send your troops to battle of lottery odds? My guess is no you wouldn’t.
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  15. #55
    The Undying Kalis's Avatar
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    Quote Originally Posted by Mall Security View Post
    I want to be covered for it all damn it lol.

    Then I’m told about the act of tree squirrel coverage. One chewed through a fucking line got zapped burned down a guys house. I get told that even as a joke I’m checking to make sure I’m covered. I just want to be covered!
    Some people are risk takers, some aren’t, you seemingly aren’t. That means over the long term it might cost you more, but you have less to worry about.

    One problem with the risk taking approach is that if more than one problem occurs at a time, you may not have enough of a rainy day fund to cover everything.

  16. #56
    Quote Originally Posted by Mall Security View Post
    Would you send your troops to battle of lottery odds? My guess is no you wouldn’t.
    A better question would be, if you would send a med-kit with your troops in case they need it. The odds of them needed it is low, so chances are they may not need it, and
    in that case money on the med-kit were wasted, but would it not be worth it if they needed it?

  17. #57
    Stealthed Defender unbound's Avatar
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    Quote Originally Posted by Mall Security View Post
    Politics aside I just mean in general.

    Home owners you have to have it.
    Business as well.

    The idea on your end is to invest in something you’ll never hope to use on money you can’t get back especially if you go somewhere else.

    Insurance no matter what you invested they want to make sure they never have to pay you and always try to find ways to pay you when they have for as little as possible. Then if you use it they can drop you or raise rates on what you paid in.

    Maybe scam isn’t the right word.
    While insurance is many things, it isn't a scam. It is a "free market" approach of sharing the costs of unexpected / unplannable events.

    Fundamentally, this is about large groups of people pitching in money so that whoever happens to get hit by that unexpected / unplannable event doesn't jump from a thriving individual / thriving business to living on the street or at least not thriving very well. Everyone in the group benefits from this because you simply don't know if or when you'll get hit.

    The primary issue with insurance companies is that they are businesses themselves. Every business always looks to maximize profit, so they will look for ways to avoid certain claims and perhaps charge more for premiums than they should. However, they are tempered by government regulations and other government oversight mechanisms (e.g. sometimes they get sued by state attorneys' in the US for excessive taking of premiums compared to payouts). Competition is a factor, but not nearly as much as libertarians would have you believe as there isn't nearly enough competition and not nearly enough customer knowledge for this to work well.

    That said, I've rarely had any issues with insurance paying what they are required to do...perhaps once in my lifetime. From digging into various reports of insurance malfeasance, I've found a few that were true (typically involving health insurance) and several that had a bit more sensationalism than real issues.

  18. #58
    The Insane Kathandira's Avatar
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    The reason insurance is a scam in some cases is because you pay into it past the value of the object insured.

    Health insurance is tricky, because there is no maximum value on life. But something like car insurance is absolutely a scam when you end up paying more than the maximum value of your vehicle.

    If you own a car that you paid $20,000, and pay $200 a month in insurance, at 100 months (8 years) you would have paid the original value of the car. Every month after the maximum value of the car, you are paying for nothing.

    I'd personally like to see a change. If you have paid $20,000 in insurance over 8 years, and have never needed to use it, that money is gone. I'd love to see it roll over to your next car. That way if you bought another car for $20,000 after those 8 years, you wouldn't have an insurance payment at all.

    Though, insurance companies would go broke if that were the case, so I understand why it doesn't work this way.
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  19. #59
    Insurance is less for you and more for others. Home insurance is for the bank or the neighborhood, whether you own your home or the bank technically does if something happens to it, they are going to want to have it rebuilt so it's still worth near the same prefire, conversely if you own the home and it burns and you can't rebuild, you just fucked all your neighbors by lowering their homes values. Cars are clear, no one cares if you can't get to work, I do care if you hit me, because I need to get to work. I'm assuming this pet insurance probably covers bites, etc...

    Insurance isn't a scam, people without insurance are the scam.

  20. #60
    It's crazy how law mandates you have to give your money to for-profit companies. It's also only useful if you're living above your means so I would definitely call it a scam. Personally my auto insurance is mandated by law and I've never so much dinged my car. I also have enough money in savings to get a new car if need be. 100% a waste for me.

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