What are the triumphs of the insurance companies, not counting their successes for shareholders?
I'm convinced that, although they are vilified in the healthcare debates, they must have also done good. Please tell me the good that they have done.
Insurance is actually a marvelous industry in many ways, with a fascinating history, beginning with the dawning of man's awareness of the randomness of events which could take down an individual, but be managed by a group of individuals all at the same risk. The study of actuarial science is fascinating, and the different ways of evaluating risk of life and death equally so. There is the risk you will die too soon, and there is the risk you will live too long. Often the same company has to make both calls, on the life side and the annuity side! Mind bogling. It is also heavily regulated, and quite difficult to interpret, but sold by those who don't know what they are selling, as a result of the built-in complications. Nevertheless, it is a contract. And contracts in writing count, and pay, in all US states and territories and a lot of other places too.
Would you like some happy doctor-centric anecdotes? My husband is a neurorad, has had two, not one, but two, aortic valve replacements, courtesy of the health insurance industry, not without a fight about pre-existing condition, but a fair fight, with cause, and they paid. I recently provided a Roth-style Section 79 Plan for a doctor whose 40-something tech was given a free fringe benefit amount of $50K in life insurance. He died unexpectedly in a surgical complication, and his widow received 50K for the cost to the doctor who employed him of about $150. My dentist accidentally killed himself in his office passing out, it was supposed from using his nitrous, and blocking his airway when he fell. He left a young widow in her 30s, with four very small children, one a newborn. One of my husband's partners died from pancreatic cancer, as did his best lifelong friend, one at age 41, the other at 56, with lovely families who needed the support of every kind, one of which was the blessing of insurance proceeds received tax free, courtesy of Frankling Roosevelt, who is responsible for Section 101(a) of the internal revenue code to protect widows during the depression from paying tax on the little buiral policy they used to decently inter their working spouses without the indignity of paying tax on the burial policy they had paid $1 a week for, for years. I am sure I personally know of more, and these were all doctors! As close as you live to the line between life and death, relative good health and relative bad health, sometimes in spite of best efforts at healthy lifestyle, surely you are aware that there is a very basic human need for insurance, assurance, a safety net worth paying
something for. In our litigious society, here is one you will like: among other things, mostly tax and business planning, deal reviews and investigating investment advisors, I sell some disability, life, long term care insurance but primarily set up captive insurance companies for doctors and businesses, so they OWN the insurance company and profit handsomely. Now, I have to get letter signed by clients who change their minds about the purchase of insurance. The letters tell me that it is their decision not to protect their family from their own remote but possible early demise, the primary breadwinner. I have to keep these in my files to protect myself, because agents have been sued by the families of deceased persons, whose agents did not adequately explain the risk of death, the consequences, and "didn't try hard enough" to sell the insurance to the deceased, who "had he known" he would die prematurely, would surely have bought the policy, and the agent therefore was negligent toward that family to the tune of the entire death benefit discussed with the deceased. How about that scenario? The world has gone quite mad, hasn't it?
Ask someone who is still alive and well and they will bemoan the money spent on insurance. As someone who has been touched by tragedy, which was eased by insurance coverage and you will hear a heart wrenchingly different tune. When I hear plans, which you will read on this forum all the time, about a doctor who plans to "self insure" until he saves enough to "not need" life insurance, I admit I cringe. I have lived a long time knowing that my own husband could die from going to the dentist, and I would gladly pay premiums, commissions and all, (although I know enough to be able to make them deductible) to have insured his life while our children were small, and because our retirement was devastated by taxes, downturns, children, moves, and the unknown unknowns of life's costs if you are lucky enough to pay your own way. Government workers have "insured" retirements, and I know how much healthcare they get, also "insured". As a matter of public policy, the tax breaks for health insurance are a subject of much debate, and many believe these benefits have led to higher usage (going to the hospital with someone else's credit card in your pocket or purse); there is not agreement, best I can tell, on whether this falls on employer or employee, as some will benefit more than others in partaking of the system, but theoretically employees will self-select for benefit-heavy jobs when they perceive a need for it, so their relatively smaller paychecks, theoretically, balance the cost to society. Do you believe that? Its a macro ec. theory, for sure...
Oh, and I live in Mississippi, where the fire department, hospitals and clinics tended to families truly devastated, including the many doctors whose homes were wiped from the face of the earth. I helped one doctor get paid probably one of the first replacement values for his swept away, newly remodelled homes, and another whose insurer persuaded his mortgage holder to forgive the mortgage on his no longer standing home...
It definintely makes the best of terrible circumstances, when you personally, in-your-face, and your own dear family, are the ones slapped all the way down one fine day...when you or they least expect it. Did I mention my Dad's acoustic neuroma, self-diagnosed in the 60s (before CT--he was a pathologist) who went to Drake in Canada to have his life saved, courtesy of, yes, an insurance company. Come to think of it, I think we have cashed in. I would love to buy more than they will let me...I don't need Tuscany. Would rather have peace of mind, no kidding. Did I mention I insure kids, babies, even against the possibility that they will develop an uninsurable disease, and that if you do this, instead of a 529, early enough, you can use cash value, tax fee, for college, professional school wedding or house down payment, or a sweet retirement. Imagine the things they will say about dear old departed Mom and Dad, when they get to be your age or mine! My slim and althletic 15 year old son became uninsurable with WPW, for a lot of coverages, and I am glad I got him that insurance when he was 11, and no underwriting was required, although it wouldn't have been picked up then. His future wife and kids I now don't have to worry about, which you know I would. Getting kids disability for Xmas, for same reasons. First, then IRAs. Just one vote among the naysayers. One friend in business says he had to face the widow of his best friend who had made exactly one year of contributions to his reitement fund, and that was the sum total of what she and her beautiful boys got--he swore that day to find a way to deductibly include life insurance in qualified retirement plans, which we can do today, for just the spousal benefit. It would have funded his entire retirement, for her. He didn't mean to die, none of them did... If you love your family, would you want them to do without you and move to a modest neighborhood and scrimp and have your spouse work while your kids wonder why you abandoned them? Those index funds won't do the trick when it matters most. A contract will. Especially with deductible or interest only premiums or both! So you don't even pay for commissions because of the tax savings...and your spouse and kids won't collect if they off you...
