Death and Insurance

I suspect most people view insurance as a necessary evil. Most of the time, you receive nothing for the money spent — except “peace of mind” if you choose to think of it that way. Bluntly, if something happens and you are uninsured or under-insured, somebody is going to hurt.

If it’s health insurance, the person hurting could be you or someone who loves you. A research study by a team at Harvard in 2009 reported that as many as 45,000 deaths in the US each year were attributable to lack of insurance coverage. That study would have been known to policymakers in Washington, and may have been one of the stepping stones to the Affordable Care Act.

And let’s be honest. If you don’t have wealth or good insurance, you’re not going to see the best doctors and you may get less than the full care you need. If people aren’t getting paid, well, what can you honestly expect? You’re a “charity case” and most hospitals neither need nor want you.

Part of the problem is self-inflicted, aided and abetted by unscrupulous “insurance agents.” I put that in quotes since we have people pretending to be agents without having a license. I always carry mine, and you should ask to see the license from anyone who presents themselves as an agent.

  1. Scam artists will try to sell “supplemental insurance” as health insurance. It’s not. A hospital indemnity policy is an add-on to your insurance, not a replacement for it. I’ve met someone who was victimized in this way. He didn’t understand the policy, and got frustrated when it didn’t cover anything he needed.
  2. Other scam artists present “cost-sharing arrangements” as insurance. Superficially, cost-sharing seems like insurance, but you need to read the fine print. Some policies have very high deductibles (e.g., $5,000 out of your own pocket before the insurance begins to pay anything) or limits on use of doctors (e.g., will pay for only two office visits per year, everything above that is on you). Cost-sharing is not regulated as insurance is, so some key consumer protections are missing. Most use some kind of religious affiliation to evade regulation — merely a form you sign, nothing you actually have to believe. Yes, I know a victim of this, too.

Arguably, one of the beauties of universal healthcare is the relative lack of the complexity that the US non-system has. Complexity allows the unethical to try to scam either consumers or government at every twist.

Death also allows consumers to shaft their families or their community, or both. A consumer dying without life insurance leaves a mortgage, taxes and unpaid bills to his wife (married or unmarried) or estate (typically with a child or lawyer appointed as executor, but a judge will appoint one if the decedent lacks a Will). The executor can take a percentage of the estate as fee-for-service, before the family gets anything. If the decedent has no money, his future is an unmarked pauper’s grave at taxpayer expense.

And without a notarized will, it could be several years before anyone in the family receives anything. So the decedent is actually borrowing money from his family, which might get paid back several years later at a zero interest rate. Everyone loses.

I’ve actually met people who told me, “I don’t care what happens after I die. It’s their [his family’s] problem.” The person saying that was an alcoholic who had lost his business, family, wealth and sense of self-worth to his addiction. Unfortunately, it happens. That episode reinforced the truth that you can’t help someone until they are truly willing to change.

Death can be expensive. A funeral can cost up to $15,000 or more. In one recent case, the person was to be cremated, but the wife wanted a service and viewing. The funeral director quoted a $1,200 fee for renting a coffin for two hours for the viewing. (There are ways to control costs with advanced planning.)

However, alcohol doesn’t explain the large number of Americans who die without life insurance each day. The total is estimated at between 30% and 50% of deaths from all causes. Doubtless there are a bunch of contributing factors:

  • Money — and insurance gets more expensive with age
  • Not recognizing the need (20-somethngs think they’re bulletproof — they’re not)
  • Waiting too late to apply — once you’re in chemo or in hospice, no one is writing insurance for you. Most life insurers won’t touch you if you’re on insulin or have had a stent. Some insurers will exclude you if you’ve been tested for Covid-19, regardless of whether the result was positive or negative.
  • Trusting that someone will raise money for your expenses on GoFundMe. Yes, the walking brain-dead live among us.

Through Accelerated Benefits riders, life insurance can be used to pay for health-related medical expenses that Medicare doesn’t cover. Medicare as it exists today isn’t a complete solution.

So, if you really want, you can screw yourself into an early death with no or inadequate health insurance, and then screw your family by leaving your (expensive) mess to them to clean up.

Sometimes I really wish Hell were a real place where people who are that selfish could be sent.

What can I say? I promised you honesty in my blog, not tact.

Note: Insurance is my senior life career.
Crain Insurance LLC
http://www.craininsurancellc.com
vic@craininsurancellc.com
Life, health (individual and group), annuity, disability, Medicare
California, Illinois, Maine, Maryland, New Jersey, New York, Pennsylvania, Virginia

Sources:

  1. https://news.harvard.edu/gazette/story/2009/09/new-study-finds-45000-deaths-annually-linked-to-lack-of-health-coverage/
  2. https://www.policygenius.com/life-insurance/life-insurance-statistics/

13 comments

  1. I just reduced my health insurance premium. My deductible doubled for the 80% coverage. If I need 100% coverage I will have to pay three times my original deductible. It is terrible, but necessary if you want to get good service when you need it.

    Like

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