Sunday, October 22, 2006


What makes insurance so expensive?

Besides each state's Department of Insurance and frivolous add-ons, check out this article and it should be quite obvious.

Yeah. You know what I would love. If I don't really ever use the money I've paid into insurance by the time I die, they should put it into a savings fund to build a statue to me. At least they could use my money to give me a legacy. It makes sense.
My argument is whats the difference between paying into insurance that you may never use and hence never use the money for or spending the unused money for something else (even a stupid statue)? You could argue that your paying to cover yourself for uncertainty in the future, but if you never used it, what product have you ultimately paid for?
Risk management. It's a service. And a wise one to invest in. As capital investment grows, the amount of damage that could be caused by a single accident also increases. Horse and buggy insurance would have had incredibly low premiums because the risk was low and the amount of damage that could be caused by a horse and buggy was low. But today's cars require higher premiums due to the increased risk and potential to cause damage.
Also, money spent on insurance gets invested into the economy, which increases our overall standard of living.
I don't believe in laws mandating insurance, however. Each person should have the liberty to decide how to manage their own risks.

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