 | ||||
The cost of insurance always feels too high. And somewhat arbitrary.
But it’s not. Let us try to explain it.
The best way to understand what goes into the cost of your premium is to understand what insurers must face when they issue a policy: They face RISK.
Insurers must accurately assess risk. For the most part, they do a pretty good job. If they didn’t, they’d be broke in a couple of years because the amount they paid out in claims would exceed the amount they collected in premiums.
Insurers have developed complex formulas for assaying the claims risk of a person. Each insurer has his own risk calculating algorithms, but there are similarities among all major insurers. (See below for the common factors.)
Risk assessment isn’t an exact science and sometimes it’s downright unfair. “Why should you have to pay more for car insurance simply because you are a guy? My wife drives like a Formula One driver, but she pays less for insurance just because she’s a woman.
It’s Not Personal: Insurers Look at Trends
Good risk assessment relies on analyzing trends. Insurance companies employ number crunchers who assemble huge piles of data. They pore through it to see what the big trends are. For example, the data says men are more likely to speed and get in serious accidents.
People with bad credit are, historically, more of a claims risk. To use another example, the data says that people who smoke are more likely to need more frequent—and more expensive—hospital treatment than nonsmokers. Maybe you only smoke one cigarette a day and can quit anytime. To insurers, though, you’re simply part of a mountain of evidence that says ‘smoking = risk.’
The Pros and Cons of Pooling Risk
There is another component to assessing risk, and it seems even more unfair: other people.
Strange as it sounds, a certain percentage of your premium dollar goes toward the cost of insuring other people. This is what’s called pooling risk, and it’s what makes insurance work. If we all carried our own individual risk, we’d never get behind the wheel, never work, never start a business, and never build or buy a house. It would be too financially risky. But by spreading the risk amongst a lot of people, we can do these things. That’s the benefit of pooling risk.
The flip side to distributing risk is that we have to pick up the slack for the riskier elements of the pool. Going back to the auto insurance example, we all pay a little extra because of young mens’ predilection for driving fast and recklessly. Regardless of our individual diets, we all pay higher health insurance premiums because of our society’s fondness for nicotine, trans fats and high fructose corn syrup.
The bottom line, though, is that pooling risk works. We give up a little to get a lot more protection.
Finally, consider this: an insurance company’s ability to accurately assess risk ensures that they’ll be able to pay should you file a claim.
The insurance you need at prices you'll like
All you need to know about insurance
Insurance Buzz
Network Marketers Inc. provides the user with a selection of quotes from insurance/ finance companies and brokers that match the exact needs of the specific type of insurance or loan required.
For example, insurance for business owners, corporate group plans, professional liability. Car, van, SUV, pick-up, truck and motorcycle insurance. Homeowners and property insurance. Whole and term life insurance. Health/medical insurance as well as vehicle and home loans.
Our system is quick and easy - You select the type of insurance or loan and provide your zip code or state, when you click "get quotes" you are presented with all the insurance/finance companies/brokers, for your locality, willing to quote on your request. All the quotes come with no obligation which makes Network Marketers facilities painless to use.
See for yourself how many great cheap insurance quotes you get for so little time and effort.
Get quotes on travel and electric vehicles,
Read our insurance articles to find out all there is to know about insurance.
Also, visit our online store, check out our low web hosting prices, don't miss our free online business course. Just click the "Website Navigation" button.
Auto, Homeowners, Life, Health Insurance quotes
The Cost of Insurance
Network Marketers Inc..
Fast and easy way to save on your next insurance policy. America's top insurers compete.
Check out all insurance providers presented to find best price for comparable insurance policies.
The above insurance companies and many more have consented to be included in our system to bid for your insurance policy
QUICK-QUOTER
