On Wed, 19 May 2004 16:10:38 GMT, hammond@not@peek.ssr.hp.com (Charlie
Hammond) wrote:
>In article ,
>"Skip Elliott Bowman" writes:
>
> [emphasis added]
>> THERE ARE SEVERAL DIFFERENT POLICIES AVAILABLE AND ALL ARE A LOT
>>CHEAPER THAN HAVING TO LOSE YOUR $$ OR YOUR VACATION.
>
>I'm sorry to point out that this last is not correct.
>Casualty insurance alwasy cost more than it pays out.
>This is becasue it has to pay sales commissions and other business
>expences in addition to what it pays out. Insurance companies make money.
Sure they do, but only in the aggregate, pooling all persons who pay
premiums and pooling the much smaller number of persons who make
claims. This does not mean that an individual claimant will pay more
in premiums that he collects on his claim.
You also neglect the fact that insurance companies invest the premiums
they collect and make profits on those investments independent of the
relative inflow and outflow of premiums and claims. It is not
necessary for the premiums collected to cover all the expenses of the
insurance company. It is only necessary for the premiums collected,
plus investment income on those premiums, to cover expenses and make a
profit.
The person with a catastrophic illness is going to receive more from
the medical insurance company than he or she paid out in premiums
during a lifetime. The medical insurance companies make their money
on those of us who don't have catastrophic illnesses.
Take it easy,
Ron Knight
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