Comments on: Are Insurance Companies Just Big Ponzi Schemes?

By: Steve

Steve — Fri, 28 May 2010 05:05:44 +0000

I think a huge difference is that the insurance company still has an underlying asset. Maybe it is a building or maybe it is a note/bond, but they have something. I think most ponzi schemes don’t have any underlying assets.

Cool way of thinking though…I sometimes get jumbled up with value inevesting…think about it you buy a stock that you hope someone else will believe is worth more money…

By: The Sun is Still Shining | Invest It Wisely

The Sun is Still Shining | Invest It Wisely — Sat, 22 May 2010 19:39:01 +0000

[...] Beating Broke: Are Insurance Companies Just Big Ponzi Schemes? [...]

By: cm

cm — Thu, 20 May 2010 16:51:17 +0000

Insurance is its own thing, closer to a casino than a Ponzi. The bet is not on the roll of dice but the chance events in the real world. And just like a casino with only one gambler in which one big win followed by a walk-away from the table will wipe it out, insurance companies rely on the statistical power of large numbers of insured people to essentially guarantee their return on investment. Joe Doakes might collect a big insurance payout, but he is offset by a million premium payers.

But unlike a casino, insurance–particularly medical or life insurance–is the only time when you hope you don’t get a return on your investment! This is because you are hedging, with money, against a life outcome you really don’t want.

By: Evan

Evan — Thu, 20 May 2010 02:06:04 +0000

Cool way of thinking though…I sometimes get jumbled up with value inevesting…think about it you buy a stock that you hope someone else will believe is worth more money…

By: bern

bern — Wed, 19 May 2010 15:32:49 +0000

Interesting take on insurance companies…hah =).

There is, however, insurance where you can recapture the cost of premiums paid: whole life insurance. You can use the benefits of this insurance when you aren’t in the position where a claim needs to be paid (when you are alive).

Other insurance products benefit you only when something bad happens…