January 18, 2013

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Real Deal About Insurance

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Do you really understand what insurance is? The common perception is that insurance is something you’re either forced to have or you decide to try hedge your losses. Therefore most people obtain insurance begrudgingly. They think like they haven’t yet gotten their monies worth unless their company pays them something back.

Now without a doubt what insurance is really. Insurance is western civilizations response to socialism or communism. In a socialistic or commune society the responsibility of the welfare of the individual is pooled by the entire society. It really works great in writing, until you do the long math. When your income is taxed to pay for your share of society’s debt, the federal government is charged with administering this task and everybody knows governments are inefficient and may never run as well as companies. Governments have bureaucracies, companies trim the fat.

Paying money for an insurance company and pooling it along with other policy holders is perfect for your benefit and when you never have to use this benefit you will improve off in the long run. Should you put in inflated or fraudulent claims you’re just going to cause yourself and everyone else to have a rate increase. That rate increase is going to make another person feel like they “have to obtain something for their money” and do the same thing as you. Rates can get higher and better as we have seen them do in the past. This is called insurance inflation. If people only make the claims which were necessary, rates wouldn’t increase or they’d only go up nominally after periods better natural disaster, and they come down after periods of normality. This is because insurance is actuarial rated based on very sophisticated formulas and statistics that take potential losses into consideration way before they ever happen.

An insurer recognizes that during times of economic decline, claims begin to rise. Everyone thinks they are the first to invent some kind of scheme or idea to make money from their insurance provider. The Truth is there is definitely an old saying that pre-dates (although is mentioned in) the first biblical books that says “there is nothing new under the sun.”

The best way to get money back from an insurer is by failing to pay too much in the first place. There are countless companies to choose from and that fosters a lot of competition. Competition breeds lower prices, you just have to search for it. Shop your insurances out very thoroughly each year. To make it easier, ask independent agents or brokers that represent you and do business with many different companies. Be certain that you’re only getting rate quotes from the rated carriers or better and make sure your coverages are quoted “apples to apples.” Companies that are not complacent to the kind of fraud I pointed out earlier are apt to have much better rates than companies that just drop you after your first significant claim. Look for a company with stricter underwriting guidelines. This can place you in with better company and you will pay many thousands of dollars less in insurance premiums over the years. Apply this savings towards your financial troubles and live a better lifestyle than the people whom think they’re smarter than the usual multi-billion dollar corporation and are always trying to create a quick buck on the backs of other policy holders.

 

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