Insurers make the world riskier?

Cool, so 33.8% of deaths in NAs age group would trigger AD&D payouts. Almost certainly less if you further split the age groups or split out college educated.

Yes, I think so.
people don’t think through a lot of things, including insurance. While I have sypmathy for the circumstances they find themselves in, not a lot of sympathy for failing to even think about them. Ignoring bad outcomes is a choice.

I’m extremely risk adverse, and I think I’m very good at evaluating risk in people’s lives, the consequences of them, and how to mitigate. I think about and avoid things a lot of people wouldn’t even think about. I don’t always get the upside, but I rarely experience the downside. So people want to save money on insurance, that’s great. But I ain’t joining your gofund me when the worst happens. (well, that’s actually not true. more like I grumble about it).

The issue I have is that it feels borderline unethical to sell stuff like AD&D and Critical Illness coverage because the uneducated believe that they are better insured than they really are. They have a lot of vulnerabilities that they don’t think about or that they think are a lot unlikelier than they are.

there’s so much cross subsidization within insurance that individual risks are almost always over or under insured.

actually, back to the OP.

If we didn’t have health insurance, do we think there would be as many unhealthy people in the US compared to the rest of the developed world? It might force people to choose between living a healthy lifestyle, vs going bankrupt/die

There’s all sorts of grey areas when it comes to sales in this industry. I’ve a number of friends who would refuse to sell a YRT universal life policy, but there’s a ton of those sold, probably more than level COI.
You are correct though, most of the sins at the sales level are corrected by education. Like the reserving actuaries buying accidental death. They know it’s not proper coverage, they know it’s unlikely to pay out, they probably know all this more than I do. If they want to buy accidental death knowing what it is, perfectly fine.

Critical illness does cover a loss; it covers your and your spouse’s loss of income for about 6 months while you deal with that condition. I guess in the US it might cover some medical expenses as well. But to speak to education, this stuff is sold and promoted in Canada as ‘get advanced out-of-country medical treatment’ and again, that’s not covering a loss. So again, poor sales. But the companies are 100% complicit in this, including the compliance department.

In the end, about all you can do is what seems right to you. If someone asked me about AD&D, I’d advise them that it’s a crappy product and explain why. Then it’s on them.

Despite my distaste of AD&D, I’d still be all in on selling 24 hour policies at airports. I feel like I’d quickly become fabously wealthy. Anyone wanna connect on a startup? :).

I do not want to lose this deal!

I think it might have more of an impact on car insurance than on medical. Buzzed driving or texting & driving could result in a huge liability payout tomorrow. Eating one more Twinkie or smoking one more cigarette is going to have a tiny marginal impact on overall health, and it will result in higher medical costs years down the road. People are far more focused on the short-term.

It would probably help very slightly with people taking better care of themselves, but probably only very slightly.

So we all agree then. insurance makes the world riskier. OP checks out.

Oh, so my limited experience with CI has been through three employers. Two paid out $10k per year for a covered illness, the other $20k. My OOP max was barely less than $10k (in network, and I guess if I had cancer then I’d probably be forced to go out of network for something at some point).

That’s…not a lot of income replacement for someone like me. Definitely helps pay some of the bills, but at that level, really just medical bills.

The really interesting was accident insurance (think AFLAC but a little different for us). It paid the individual’s BILLED amount for an accident (and some actuary successfully argued his kid getting poison ivy was an accident because it happened not on purpose). So you go to the ER for a broken arm, get billed $2k, insurance negotiated rate is $1k, so that’s what you pay (or maybe you’ve already met your deductible, so you pay less), but you collect $2k from the policy (think it was capped at $3k per year).

Lots of jokes about people hurling themselves down the stairs to make a few bucks. I don’t think it ever really happened, though, the product was so underutilized.

Ci might be different up here. It covers heart attack, cancer, stroke and about 23 other serious conditions. Plus they have what’s called an early intervention benefit for another 4 or 5 minor conditions for which it’ll pay like 10-15 percent of face. It doesn’t cover everything, but it does cover the common things. And average face amount is $100k.

I’ve got 100k permanent ci on both the kids and 250k permanent life on both of them. And lucky I did, because ones already had an early intervention benefit on the ci, and they’re currently uninsurable for life ins as a result. The 250k is all they have for now as they buy a house and start their family.


And I didn’t bother with ci for my so and I because we can make it through some months without income and I’ve got as much Ltd as they’ll sell me. So if I get a covered condition, I’m either dead (at which point my so can retire), back to work shortly, or on Ltd. And no medical costs to speak of.

Which raises my point about ci in the two countries. My understanding is that there’s copayment, deductibles, maximums, and basically even with good healthcare something like cancer is going to cost Americans out of pocket. Socialized healthcare means I pay 0. Zippo. Nada. No lab fees, nothing. In the us, seems like ci would help supplement insurance.

I read the intro paragraph and glanced at the appendix with the math in it. Not gonna invest any more time into it… :man_shrugging:

…they’re not supposed to be (I mean, between lines of business. Within lines of business, well, that’s sort of the idea)

the line is blurry. The whole point of pricing segmentation is to prevent cross subsidization, between or within LOBs. But cross subsidization is essentially how most insurance products work. No two individual risks are alike.