9 Facts about Insurance

Spot your insurance agent?
Spot your insurance agent?

Fact 1. Insurance is commission driven. Agents cannot earn commissions by teaching you the odds of unwanted things happening or how to manage a crisis. The livelihood of insurance agents depends solely on how much premium they can generate, not by how much they educate you.

Fact 2. Nowhere in our public education system can you learn how to buy insurance that will benefit you and/or your business as much as it does the sellers. The insurance industry has historically controlled your “education” in all insurance matters.

Fact 3. Insurance is totally invisible. Unlike a tangible product, the results of your insurance policy can only be determined after your business, home or life is in serious trouble.  The words “protection”, “security” and “peace of mind” are the illusions that cause people to buy insurance.  Yet, these words have nothing to do with what you will have to do when things go wrong.

Fact 4. The real business of insurance is cash flow management. Insurance companies are in business to make a profit. They collect your premiums first, and then strategically manage their losses (your claims) to insure their profits. Insurance companies cannot profit by helping victims collect money from them.

Fact 5. Insurance companies are masters of information. They fully understand human behavior, actuarial science and cash flow management. This combination of information allows them to sell policies which are so well written that they can almost control the outcome by the exclusions in the policy.

Fact 6. The insurance industry spends billions on sales aids, brochures, presentations, commissions, radio and TV advertising. However, a clear set of instructions for insureds entitled “How to collect money from us quickly and fairly” are never delivered with insurance contracts.

Fact 7. Only 3 people in 100 ever complete an insurance claim form well enough to pass rejection on the first attempt. And 40% fail to ever collect the full amount of what they are entitled to.

Fact 8. Decisions made under stress or intimidation are never as good as decisions that could have been made well in advance and under much better conditions, which is why it makes sense to understand how to file a claim before you buy insurance.

Fact 9. The best insurance you can buy is education – not official-looking papers with promises printed on them.  Make an effort to learn more about insurance.