Why do we need private health insurance companies?
You don’t need private insurance companies. But they are very useful.It does not matter who provides the care (government or private), but bills have to be paid.Many nations provide healthcare through an arm of the Government. For example the British National Health Service provides free care for it’s residents. There the government not only funds the treatment, but operates the hospitals.In the USA much of the medical treatment is funded by health insurance companies. Many of these are private for profit organizations.The difference between an insurance company and a government agency providing care, is that an insurance company has a contract and thus obligation to offer care according to that contract. Failure to offer care results in a risk of litigation.Contrast this with a Government health service. I live in New Zealand and while my government care is almost free, there is no RIGHT to get care. There is only a finite pool of money in the local health board, thus the hospitals will ration care. This means that I have to wait to see specialists unless I pay out of pocket. Hospitals will limit care as a way of saving money. Of course private insurers will want to limit care and will put certain rules in place to try and control costs.Contrast this again with a private hospital. They have a strong incentive to offer as much treatment as possible. Every treatment they offer is a source of revenue. The insurer has less control over the operations of the hospital. The most they can do is remove the hospital from their network of covered providers.To conclude you don’t need insurance companies. But many places choose to use them.
Why do people fear insurance and insurance companies?
I think ‘people’ fear insurance and insurance carrier because:1.) Someone they know had a loss that had an unfavorable outcome, in their opinion2.) The person buying the insurance policy is not sure what to buy and not sure of the insurance contract so they fear the insurance itself3.) Insurance carriers seem scary4.) Insurance is ‘expensive’ and you really don’t get anything for it5.) There are a lot of words in an insurance contractThe truth is insurance in a necessity in everyday life if you don’t want to be liable for every little thing that can go wrong. Here are some reasons to find a really good insurance broker:A.) If you own or rent a home and a friend or relative comes over to hang out, but slips and falls they can sue you. You would want Homeowners or Renters coverage for Liability Insurance and an Umbrella Policy for at least $1m to cover not only your assets, but to be represented in court and/or trial. B.) That same policy would cover you in the event of a fire.C.) When you are driving your vehicle you need insurance coverage. If someone hits you or you hit someone else you will need insurance. The Umbrella Policy from example A will help you out here, as well. There are many, many more examples I could give (and bore you). The bottom line is – an insurance policy is risk transfer i.e. you are transferring your risk to an insurance carrier. As the buyer of the policy it is your duty to know what you are buying. Yes, you should have a broker or agent explain the policy to you, but you should also read the policy, as well. After you have a loss is NOT the time to start reading how your insurance works and what to do in the event of a loss. There is nothing to fear with insurance or insurance carriers. My advice is to save receipts, maintain pictures or videos of your possessions, read your policy(ies), know what to do or who to call in the event of a loss (auto or otherwise) and know what you are buying. If you have questions – ask.
Why do insurance companies still use the wording "Act of God"?
I noticed in my policy they don't cover "Acts of God" (referring to God-provoked events like floods & earthquakes). I'm an atheist... so couldn't I challenge this in court, forcing the insurance company to prove God exists (or else cover me for damages?)
Do insurance companies actually save you money?
Imagine yourself and your two best friends are approached by someone who tells you, “In the next 30 years, one of you will suffer an illness which will cost you $500,000.”You don't know which one of you will be the victim of the illness, but one of you definitely will be.There are two approaches to this.The first approach is for each of you to set aside $500,000 for this eventuality. As a result, the three of you will have set aside a total of $1.5 million just waiting for this event which you don't know who it will strike and when.Eventually when it does, $1 million will have been set aside for no use. Not the most efficient way of managing this risk.The second approach is for each of you to contribute one third of the amount into a common pool of money with the agreement that whichever among you became the victim that pool of money would go to them.This approach uses only $500,000 from all three of you, allowing you to divert the remaining savings towards other purposes.This is called risk pooling, and forms the basis of how insurance works in a population.
Why do insurance companies charge first and last?
I have written billing software for several auto insurance companies (for about 15 years) and have never heard of such a thing as you describe it. What they may be referring to is the rest of the current month pro-rated for the new policy (it is a new policy even if it is the same company), then the beginning of the next month. That way you are always paying them in in advance, like you are now. Basically, you will not be paying at the beginning of next month. Processing bills, printing them, mailing them, etc. costs money they don't want to spend. Most importantly though is retention (and often times how it looks on the books - in addition to extra certain 2 or 3 weeks of payment they are getting from you). A large percentage of people do not make a second insurance payment. They get insurance to get their car licensed, then stop paying. Having you pay a half a month (for example) then the next whole month in advance shows up as two months on the books (which allows them to get more money and keep their current re-insurers - which basically insure policies with huge amounts of money in case of a catastrophe and the company has to pay out on everything, having more of that money means they can legally issue more policies... and make more money). They shouldn't be keeping or holding anything. There shouldn't be any money laying around other than what you paid in advance. Most likely, you are simply paying for the rest of the current month, the beginning of the next month, and will not be billed until the month after. EDIT You are canceled immediately for non payment, no prior notice required. The only notice required is for rate changes (ie hiking your bill up, or rarely for changing the way they rate) or cancellation (they just don't want you regardless). This may vary in some states, but not any I have done (most).
If health insurance companies charge monthly premiums why do they still charge yearly deductibles? That's just ridiculous.?
To make more profit. They want you to pay your deductible and if you never meet it, they never have to pay anything out to cover your claims. I think that should be illegal but as long as the insurance lobbyists pay off Congress nothing can change. Maybe if people sue the insurance companies about that in their own state, it can change. Insurance practices are controlled in each state.