If insurance is gambling then there is a risk of losing, right?
What math calculation should you perform before you place any bet?
The “Odds Calculation“, right?
I.e. “What are the odds that you will win vs the odds that your opponent will win.”
If you’re gambling with insurance companies or casinos, they know the odds in exact detail. They hire people with advanced degrees in bookmaking.
Remember our previous post. When you deal with an insurance company or a casino…
The Odds Are Always in the House’s Favor
In a casino, there are no bets that even offer 50/50 odds. You’d think roulette would be 50/50, wouldn’t you? Red or black. Even or odd.
But no… there two green spots on that wheel.
Can you change the odds to be in your favor in a casino? Yes. Learn to count cards. But what happens when they catch you counting cards?
At best, they kick you out of the casino and black-ball you from all the casinos around, right?
Insurance is the same…
You will never buy a policy where the odds are in your favor.
So, what type of insurance should you NEVER buy?
Never buy insurance on stuff you can afford to pay without insurance!
The only reason for insurance… and I mean THE ONLY REASON for insurance… is to transfer the risk of losses that you can’t afford without insurance.
Does that make sense?
This is the reason our current American health care system is so expensive!
The health care system trains us to want insurance on all the small stuff like doctor’s visits and Rx drugs.
That is not insurance.
That is health care FINANCING!
Insurance companies are always going to make a profit.
So, to finance it for you, they will charge you more interest than a credit card company.
If an insurance company expects to pay $500 in doctor visits and Rx drugs, they will charge you over $700 in premiums…
Guaranteed… whether we go to the doctor or not.
If you don’t go, you lose the money you pay in premium. If you do go, the insurance company just gives you back your own money and keeps “the juice”. (The juice is a gambling term for the money they collect for taking our bet in the first place.)
This is one of the reasons ACA (Obamacare) plans have skyrocketed. (We’ll talk about other reasons later.)
How expensive would car insurance be if it paid for oil changes and new tires?
How expensive would homeowner’s insurance be if it paid for power-washing and new paint?
Do you see the issue?
So, what type of insurance should you never buy?
Never buy insurance on stuff you can afford to pay without insurance!
I mean… you can. I can’t stop you… but the odds are against you when you do…
What I want for you is what they keep repeating in the Hunger Games…
May the odds be ever in your favor!