Is insurance just a scam or is it a financial necessity? Numerous people hold the opinion that insurance is a scam designed by insurers to take away the money they’ve earned from honest, hard work. However, the government, the insurers, and financial institutions perceive insurance as a financial necessity. So who is right?
The answer is that everyone is right to some extent, and wrong to some extent. The basic concepts that insurance coverage was founded on are not scams. Insurance was established due to the financial burdens created by commonly occurring accidents, such as car crashes, and unforeseen events such as fires.
How insurance can be a scam
Although insurance is basically supposed to provide financial security, it can easily be used as a scam too. Fraudulent insurance companies may be set up by unscrupulous characters. This can include people who set up fraudulent traditional insurance policies, such as life, home, motor, and professional or public liability policies. In most cases the consumers don’t realise it is fraudulent cover until they need to file a claim.
However, it more frequently involves people who set up companies to sell fraudulent healthcare, dental, credit protection, identity theft protection, or product warranty plans. In these cases, fees or premiums are collected and fraudulent documentation is issued to the consumer, but there’s no real services provided. The consumers normally doesn’t find out it’s a scam until they actually try to use the covers to pay for these types of services.
These are usually companies that set up a temporary office someplace, along with a postal box to collect the premiums. The company issues false documentation as proof of covers, and then disappear before any claims can be filed by the insured public. Unfortunately the purchasers don’t normally find out they’ve been scammed until they go to file a claim or are pulled over by the police.
However, there are also insurance scams being conducted by other people, as well. For instance, there is the “crash for cash” type of scam. This is where two or more people work together to force an unsuspecting driver to crash into the rear of the car in front of the driver. This type of scam is frequently carried out by gang members and other organised criminals. Although it’s normally used to file fraudulent claims against an insurance company, it is also used to extort money from those drivers who may not want to have the accident reported to the police or insurance company.
How insurance can be a financial necessity
Although insurance can be used to scam consumers, it’s still a financial necessity. All humans are mortal and prone to accidental injury and illnesses. Fatalities, property damage, and serious injuries due to someone’s carelessness, ignorance, or negligence occur every second of the day. Additionally, there are natural disasters occurring, which frequently add to the count of fatalities, serious injuries, and property damage. Moreover, despite the best efforts of the medical professionals, people still become ill and disabled.
Due to all the things that can happen to a person throughout their daily living, there is a high risk of a person becoming ill, disabled, or dying. There’s also a high risk of some type of property damage being done or some type of man-made product being defective throughout a person’s daily life. However, becoming ill, disabled, or dying due to accidents or natural events does not end a person’s legal and financial obligations.
The individual or the individual’s estate still must pay off any debts the individual has amassed. Nor does the loss or damage to property mean the person gets to quit making payments to creditors for the purchase of the item. Moreover, the individual must compensate anyone else that was harmed in any way if the accident was his or her fault.
Sometimes an individual may have to replace all his or her possessions due to an unforeseen event. This may include the person’s home, vehicle, family heirlooms, and household contents. Whether through their own fault or someone else’s, or due to natural occurrences, every human eventually will incur a heavy financial burden. Since most humans would be financially ruined by this heavy burden, insurance becomes a financial necessity. Insurance, when used properly, can help to relieve this heavy burden, making it easier for the individual to recover from the disastrous occurrence.