Insurance Problems and the Economy
The concept of insurance is getting a lot of mishaps in recent news. Something that is normally considered as a way to lessen financial risk is now ending up a factor that actually increases it. Nowadays, with the downhill trend of economy that we are currently facing, insurance companies that declare bankruptcy is a frightening prospect for a lot of people who have done business with them.
But why the distrust with insurance companies these days? There are speculations that it's because of a company's direct refusal to insure a person with a high likelihood of loss. For example, someone who engages in extreme or contact sports will have a low chance of getting life insurance. If you're someone with a high-risk profile, you may have problems getting legally insured. To a lot of people, this is the exact opposite of what insurance is.
Which leads us to the question: What is insurance supposed to be? Many of us invest in insurance without completely understanding how this affects our finances. In anything concerning money, a blind investment puts it in serious risk.
At the core, purchasing insurance is an act of accepting a definite loss of assets (in this case, the payment of a periodical premium) so that a larger, possibly devastating loss is averted. The loss that is to be avoided must be accidental; an insured person should not deliberately trigger the accidental event. Such a thing is understandable, as there are some enterprising people who wants to make some quick cash by deliberately getting themselves in accidents.
Now, this is where potential problems enter. The idea of compensating a loss becomes a problem if the insurance company suddenly goes bankrupt. If that happens, you would just feel like you accepted a loss without gaining anything whatsoever. This, it seems, is what puts off a lot of people. - 23200
But why the distrust with insurance companies these days? There are speculations that it's because of a company's direct refusal to insure a person with a high likelihood of loss. For example, someone who engages in extreme or contact sports will have a low chance of getting life insurance. If you're someone with a high-risk profile, you may have problems getting legally insured. To a lot of people, this is the exact opposite of what insurance is.
Which leads us to the question: What is insurance supposed to be? Many of us invest in insurance without completely understanding how this affects our finances. In anything concerning money, a blind investment puts it in serious risk.
At the core, purchasing insurance is an act of accepting a definite loss of assets (in this case, the payment of a periodical premium) so that a larger, possibly devastating loss is averted. The loss that is to be avoided must be accidental; an insured person should not deliberately trigger the accidental event. Such a thing is understandable, as there are some enterprising people who wants to make some quick cash by deliberately getting themselves in accidents.
Now, this is where potential problems enter. The idea of compensating a loss becomes a problem if the insurance company suddenly goes bankrupt. If that happens, you would just feel like you accepted a loss without gaining anything whatsoever. This, it seems, is what puts off a lot of people. - 23200
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posted by X - Men @ 12:53 AM
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