Who really benefits from insurance?
Despite its widespread use and popularity, this seemingly simple sentence requires a more rigorous examination when it comes to who benefits from insurance. Currently, most people are told that they benefit from insurance because it protects them from financial losses.
In reality, this is not true for everyone. According to recent surveys, about 40 percent of those who pay for insurance are paid by their employers. The remaining 60 percent of the population receive income from the insurance industry and have little control over how much they get in comparison to their contribution to the industry.
Insurance companies also come up with various ways to initially get new customers through various tactics such as high penalties and long waiting periods. These tactics are used to create a sense of urgency in their customers and instill the concept that they are not saving money by not insuring themselves.
After all, if they wait long enough and don’t pay these penalties, they will end up in worse financial shape than if they had done so sooner.
Let’s see into paying system if insurance really benefits you
The fact that most people who pay into insurance pools actually benefit significantly less than those who receive it is reason enough to question the need for such a system, but there are many more serious reasons behind this reality.
For example, insurance companies have a vested interest in making sure no one ever claims on their policies because the payout from such events would be too costly for them. It is generally easier for an insurance company to get away with not giving a payout than it is for them to give one.
Moreover, insurance companies have made it difficult to actually receive a payout by placing various restrictions on the process and by discouraging reporting of incidents that could lead to a payout.
For example, the 9/11 attacks were treated as a criminal act rather than an act of war despite the fact that they affected tens of thousands of people and were used as justification for invading Iraq. The families of victims were then forced to sue in order to receive any sort of payout because they weren’t considered ‘victims’ in the eyes of the insurance industry.
Then, is insurance a fraud, a business?
This is the most important point in this article. Insurance is a business, and the only way it can make money is by making people pay premiums and then not having to pay out any claims. In other words, the insurance industry’s sole function is to make money from more than half of its customers and give nothing back.
This does not benefit society in any way, shape or form because there are countless alternative ways for people to protect themselves against unfortunate events without contributing to an industry that offers nothing in return except profit.
Consider a few simple examples: If you want fire protection, then save up money and buy a fireproof safe or hire someone to install an alarm system. If you want health insurance, buy a health policy from a reputable company and pay for the services provided. If you have to do something with your car, get car insurance.
In addition to this, If you become injured at work, then sue the company and collect unemployment benefits. If someone you know has also met with injuries, take them to the doctor and pay for the prescribed treatment.
These are just a few examples of how people without insurance benefits could protect themselves without enabling an industry that usually only benefits those who pay for it.
Why insurance if it very hardly benefits you?
Despite its many drawbacks, most people outside of the insurance industry believe that this system functions in their benefit so strongly that they are willing to accept these drawbacks because they feel it is better than no protection at all. However, what this system really achieves is making life more expensive for everyone and giving some people a level of financial security they don’t deserve or want.
As mentioned before, this system allows some people to become ‘insurance rich’ while others remain poor. For example, in the event of a flood, the families who own homes will be able to rebuild using insurance money. The families who live in public housing are not so lucky.
Insurance also encourages people to waste time and money by calling for a lot of services from professionals. For example, if someone becomes injured at work, they will head to their doctor first before seeking medical help from someone else or even going straight to the hospital. This is because they know they will receive compensation even if they go through different sources of medical treatment.
This idle behavior is not beneficial for the patient or the healthcare system because it creates unnecessary expenses and does not help anyone receive faster aid.
Are arguments against the insurance system right?
Maybe! A society that functions this way is one that benefits those who pay for insurance and harms those who do not, which could be an argument against such a system. It could also create a conundrum in which people who did not even know what it meant to get insurance. They suddenly find themselves paying taxes to support insurance companies they had never heard of before.
In this way, insurance brings with it some level of deception as well as a feeling of entitlement based on the lack of sufficient information. These are not values a free society can endorse.
The most important function of insurance
Perhaps the most important function of insurance is that it encourages people to believe that they deserve financial security instantly and without question. People completely lose sight of the fact that homelessness is a real possibility and that others in the world could make the same decisions they did but live differently simply because they live in a different economy or have access to different opportunities.
This however is not true, because there are countless examples in history where hard working people became poor overnight because they made one error or another, and there are also examples where someone who did nothing at all stayed rich for generations on end.
The future of humanity is highly dependent on how we deal with risk and danger (both real and perceived). But most importantly, it is dependent on how we deal with the risk of mistakes and blunders.
If we allow insurance companies to make the definition of ‘mistakes’ and ‘stumbling upon dozens of rich opportunities’, we will lose our freedoms because we will be allowing an industry that profits from failure to define what we could consider success for humanity as a whole.
What’s the solution then?
The solution is not for everyone to stop paying for insurance. It isn’t even necessarily to stop paying any taxes, although both would remove excessive government regulations and pass the cost over to large corporations like insurance companies instead (which they would then use as a job-promotion tool).
The solution is to stop allowing insurance companies to be an essential part of our government and economy. They are not an essential part of society, they are only beneficial to those who pay for them.
If we stop supporting the concept that insurance companies contribute positively and the society benefits from insurance policies, it will make more people think twice before they allow corporations to rule over their lives under the guise of protection and security. It would reduce taxes on all social classes and allow people more options when protecting themselves against ‘unfortunate events’ outside the system.
More importantly, it would help us achieve greater personal freedoms and a better understanding of how much life costs us in order for us to become resilient enough on our own to ensure our future as a species.
Are you making insurance companies rich by buying insurance?
Yes, but it has mutual benefits. You need insurance just as much as they need to make money. The stork only brings the child because both involved need to be paid in return. You can argue that insurance companies make these people rich and that they also get jobs that they don’t need; just because there are customers who will pay them.
I would like to argue against this, however, by saying that even if these people do not need insurance companies, they still have a reduced risk of dying because of the services provided by the company. We can see this as indirectly contributing to society in order for someone to gain material wealth through trade or self-employment with minimal effort (like anyone who makes a steady income on their own).
Are only the insurance companies profiting?
The problem is that insurance companies are not the only ones profiting. There are many other industries and people who profit as well, and to answer your question directly, you probably fall into this category.
Insurance companies don’t make money because they sell you insurance (if they did, then they would close down when they don’t have any customers). They make money indirectly because they are the largest spenders in certain industries. Put simply, if insurance companies didn’t exist, we would lose those profits to someone else.
Imagine this: you work for a company and your job is to sell car parts to other car manufacturers. You sell them parts at a reduced price or a higher price and they in turn cut their prices to end users (people who buy from them). This is basically how it works with most consumer products. So you have the insurance company, the car manufacturer, the distributor, and the consumer. Everyone profits except for you.
Insurance companies are in a unique position because they control vast amounts of capital directly without having to pay anything in return, so they use that money to make more money by buying stock at large companies. These large companies then take advantage of this by raising their prices. So, it's still to guarantee that a person comfortably benefits from what they pay for insurance coverage.