Imagine yourself shopping for car insurance. Would you allow yourself to enter a risk pool where the other members could forgo premium until they had a severe accident and then secure covereage to retroactively cover the damage while you and others paid your premium continuously? Seems a bit unfair, eh? Not too mention that no one would bother paying premium regularly if that was not necessary to secure coverage. And just think what the premium increases would be like in such a risk pool. Brutal. Now imagine Life insurance which can be purchased for someone after they had died or fire insurance after the house was smoldering in ashes. Think those policies would be cheap? Would responsible individuals who wanted to insure against future loss sign on to be part of this risk pool? Insurance is designed to protect against an unforseen future loss. Forcing an insurer to cover a loss which has already taken place is welfare as John Stossell points out in this article. We have a very imperfect health insurance …
Sourced from: Group Life Insurance
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