Dwdonhoff: "Hi JAFO"Howdy.<<<How does that property insurance policy protect anyone from a decline in the value of the house.>>>"After a fire (absent the expense of subsequent rebuilding) your home will usually be worth less on the open market than prior to the fire."Who said anything about a fire? You response is a nonresposnive to my question.<<<There is are no equivalents to puts and calls for homes.>>> "Sure there are, puts and calls can be written on any underlying asset. For individual real estate assets specific option contracts can (and are) written."Maybe, if you are lucky, and at what price? "Puts and calls [for securities] are generally written for one, two, three, or six months, although any period over 21 days is accepted by the New York Stock Exchange."http://education.yahoo.com/reference/encyclopedia/entry/puts...See also: http://www.cboe.com/ - Chicago Board Options ExchangeTo what market do I go for a real estate put or call and what are the boilerplate contract terms for a real estate put or call?I stand by my statement that there is no equivalent.<<<And if you have to move across country and sell your house after the real market has turned down, how does the insurance policy hedge such risk?>>>"You're eithrr intentionally, or accidentally, reaching... to try to equate the hedge of hazard insurance to market volatility insurance."I am intentionally trying to show you why several on this board think you are misusing naked versus long and insurance versus hedging."If its easier to understand, you *could* trade specific options on the ownership of your own home with local expert real estate investors/agents. You could go long ownership of your home, and buy a put option (the discretionary right to sell it at a specific price during a limited period) to a local investor, at some mutually agreed price. You can negotiate the same with calls (long or short.) You can't "borrow a house to sell" (at least not very easily,) so short positions would have to be entirely synthetic (long put, short call,) but certainly doable."Each one custom negotiated and crafted and without any standard provisions. Not nearly the same as calling your broker/using an interent interface to buy or sell a security put or call."Insurance is a practice by which a company provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment."Insurance is a heavily regulatated industry and not just anyone call sell insurance or form an insurance company. And I am aware of Lloyds."To hedge is making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract."http://www.investopedia.com/terms/h/hedge.aspHedging does not require an insurance company, and is clearly talking about adverse price movements (not a casualty event).Whichever source that you cited calling a hedge insurance was either a simile or a metaphor (I do not recall the exact wording and do not want to go back through the thread) and not a definitional equivalence.An IUL essentially creates a collar, and the expenses of foregoing all dividends, plus the cost of insurance (mortaility cost), plus the other policy costs, plus the upside about the collar ceiling, and the benefits received are the floor and the insurance payout if the policy stays in force until death.Insurance companies, like all companies are looking to make money, and hire some of the brightest mathematical minds to set their pricing. Other than companies buying market share or the occasional mis-pricing for new products, the insurance company always set the odds in its favor in the aggregate.I still believe that for most people, if you need insurance, buy insurance. If you are looking for investment choices, buying an investment wrapped in insurance is rarely the best way of doing so with first dollars, which not to say that there are not some people for whom it makes sense. Unfortunately, the number for whom it makes sense is usually smaller than the number who are actually purchasing it. Regards, JAFO
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