Is insurance just a pyramid scheme?

I would have to say yes. It's almost a textbook example:

the participants pay to join a waiting list for a desirable product which only a fraction of them can ever receive.

here

Its a good racket. Especially how the companies spend most of their effort trying to not give out the money. And sure, there's a lot of people trying to make a quick buck by faking claims, but the vast majority of people's houses aren't going to burn down, most people aren't going to cause a fatal accident.

And health insurance is just a flat out scam. Just look at the cost of simple medicine, $80 for that pink stuff (that tastes like bubblegum)? thousands of dollars just walking in the door? And how much do you put in a payment? After years of paying, you're in a accident, get life-flighted and your out $20,000. Where are the companies getting all this money?

Insurance just give off a "hey, if you pay a little now, you'll get a big payout *wink nudge* later" vibe. Am I right, or not?

Edit to add: If insurance really is a Pyramid scheme, it's severely illegal

[edit on 17-10-2009 by afterschoolfun]

Probably closer to a gambling scheme.

Insurance involves risk assessment and value.

If you have an insurable risk, something that might not happen, then you can buy insurance. If it is going to happen someday, but maybe not for a long time, like death, then you have a different sort of risk.

reply to post by Jim Scott


yeah, the risk is that event X will happen and company A will even pay the money for said event. so half pyramid/ half gamble probably

Do you believe motoring insurance to be a pyramid scheme as well?

IMHO motoring insurance is a MUST.

Insurance is a total rip-off, not a pyramid.

Some guy thought - why not get a zillion people paying you so nothing will happen? Then, if you get a few, so what.

That is why they have the big shiny buildings.

Originally posted by afterschoolfun
I would have to say yes. It's almost a textbook example:

the participants pay to join a waiting list for a desirable product which only a fraction of them can ever receive.

here

Its a good racket. Especially how the companies spend most of their effort trying to not give out the money. And sure, there's a lot of people trying to make a quick buck by faking claims, but the vast majority of people's houses aren't going to burn down, most people aren't going to cause a fatal accident.

And health insurance is just a flat out scam. Just look at the cost of simple medicine, $80 for that pink stuff (that tastes like bubblegum)? thousands of dollars just walking in the door? And how much do you put in a payment? After years of paying, you're in a accident, get life-flighted and your out $20,000. Where are the companies getting all this money?

Insurance just give off a "hey, if you pay a little now, you'll get a big payout *wink nudge* later" vibe. Am I right, or not?

Edit to add: If insurance really is a Pyramid scheme, it's severely illegal

[edit on 17-10-2009 by afterschoolfun]

I'm going to disagree with you and say that insurance is a form of socialism. The rich people (either rich in money or rich in good health) are the ones who pay the most in insurance but receive the least treatment because the rich pay outrageous amounts to insure their vehicles so that if they injure another person, they are insured and avoid being sued in court and lose their entire home because the accident paralyzed someone from the neck down. And, those in great health who are insured pay for those who are more sick than they are.

Insurance is like an equalizer: the responsible ones pay for those who are "less fortunate." The alternative to car insurance might be to insure the car in the name of an LLC and getting a driver's license and insurance under the same LLC, which is a "new person" under the eyes of the law. So, if you get in an accident, the person can only sue that LLC, which if this LLC has a limited bank account balance, that is all you stand to lose. The other person can't touch your other acounts because they were never registered with the DMV, insurance, and banks. It's as if the real you is driving the car of a new, "ghost" person / LLC. It even plays out when you realize a CORPoration is a a CORPse - non-living thing.

If you are a lawyer, you come to realize these things. If you are not, then you lose out unless you get legal counsel. Oh the unfairness of it all, huh?