The Definition of Insurance

Perhaps one of the big problems contributing to the rising costs of health insurance comes from the fact that many people have forgotten the importance of insurance. When you ask someone what is important for their insurance, you often hear things like "good results of prevention" or "low copays for office visits and prescription" or "low deductible."

When you remind people that will save much money for the premiums for selecting a higher deductible with less coverage for the current expenditure, which often respond by saying something like "what is the point of insurance for all whether the "still paid for all of your visits to their doctor?" Or will that says, "Well, I never have a value of $ 2000 for medical costs in one year, with a deductible so high that none but the pain of insurance. "

The problem with this reasoning is that people think of insurance as a direct payment for a service of equal value. When you buy a car, if you pay $ 10,000, you can wait until the end with a car valued at $ 10,000. Insurance is totally different commodity.

You pay a premium for the intangible benefits, ie. the peace to know that if you do not have a health crisis that will not leave you bankrupt. Insurance is an aleatory contract, which by definition means "according to an uncertain event or contingency for both gains and losses." Therefore, you can pay premiums relatively low compared to the potential benefits - both for you and the insurance company that the chances of you who need the benefit is low.


Therefore, for insurance to work as designed, you must be willing to buy one, hope that you never use, and know that the premiums you pay only give you a specific benefit in the unlikely event that you have a serious illness or accident. The intangible benefits, to be able to sleep at night because you know you have a safety net insurance in force, is that every day gives you peace of mind.


When people start carrier expects insurance to cover the expenses they know they will incur (ie, maternity, preventive care, etc.), the insurance starts to lose its random nature. It then becomes a tangible product, which means that people who pay premiums and expects to fully realize the short-term monetary benefits. Insurance companies are generally subject to for-profit organization. Then you know that they do not give something free to consumers. If we are in full the purchase of insurance and expect to cover the planned events, we must realize that the costs of these services are included in our premiums.

--- Source : http://healthinsurance-colorado.blogspot.com ---

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