[geeks] Insurance, and Why I Hate It (long)

[Big Endian]

>you have the choice with life insurance of a term life or a cashvalue plan,
>why then dont we force them to give us the same options with car's?
>1. you still pay in the same ammount per month
>2. the money you pay in collects in a managed investment account, you pay
>some service fee to the account managers, the company gets to keep 60% of
>the earnings from investing( for overhead) they will also take 60% of the
>loss.
>3. if you reck your car, and it's less then what you have pay'ed in then
>you'r account covers the bills and you start over with what your left with,
>if it's more then your account is wiped out, and you start with whatever
>negitive $ you are left with, but your monthly dose'nt change, and can only
>be adjusted based on the same critera that is used now to deturmin your
>rates.
>would this work?

Probably not.  The huge difference between life insurance and car 
insurance is the probabilities.  There is a very significant 
probability that you will be in some kind of car accident that, even 
if it doesn't result in personal injury, will damage or destroy the 
car in the next year.  The odds of death or a maiming injury in the 
same period are much lower.  The life insurance payout might be 
higher but its much less likely.  These dictate the amount of 
*LIQUID* capital they must have on hand to handle the claim demands. 
An insurance company is much like a bank and when the demand exceeds 
the amount of liquid capital, the company will begin to fail.  A cash 
value system in car insurance is less viable do to this problem.

daniel
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"Fragile. Do not drop." -- Posted on a Boeing 757.