UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 77551  
Subject: Re: Bag lady in training? Date: 11/1/2000 12:09 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
"There are those who will say that you're running a large risk by dropping the disability. However, I stand by my position--the insurance company is betting heavily that you won't need the payout until your premiums have accumulated, in the company's investment program, to the point of covering the value of that payout."

No, that is not the "bet" the insurance company is making, as you indicate later in the post.

"I'd take them up on that bet--only let the premiums accumulate in your pocket, instead. It is a somewhat one-sided bet though--if the insurance company loses, it can make it up from all the other winning bets it has on the table. You, the individual, have no such reserve."

The bet you described in the first paragraph is the bet that you are asking the individual to take. The insurance compnay is "betting" that notmore x% of the total people insured will not claim the insurance before the premiums accumulate AND before the earnings on those premiums accumulate. Insurance companies invest premiums paid before they are need for pay out (the float) and earn a return with them.

"Having thought it through a priori, and having been through one example, though, my wife and I remain uninsured beyond the free stuff that's part of our respective employment compensations. (Incidentally, when I declined any health coverage at my job(I would have had to pay some of the premium), the company paid me most of the premium they no longer had to commit to cover me.)"

It is your life to live; I only hope that you have no reason to regret your decision. Personally, I do not think thatyou have fully understood all the risk or the fundamental "risk sharing" approach to all non-life insurance products.

Regards, JAFO

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev Thread | Prev | Next | Next Thread


The Retire Early Home Page
Discussion on accelerating retirement day.
Kiddie Card Board
Should kids have their own credit card?
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Berkshire Hathaway

Taking Candy From Strangers
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.