Mathematical revenge from actuarial hell

Been reading more about Obamacare and how the law is (still) failing.

Insurers can’t make a net profit on these plans.

People can’t find affordable coverage.

No one is really all that happy (except the politicians who are, interestingly enough) exempt from the law.

And on it goes.

And yet there are True Believers out there who are in denial.

Of course, they get subsidies for their insurance so they don’t feel the pinch (yet). As those subsidies fade away, they’ll start seeing the true cost for their health plan.

But by then it’ll be too late.

We’re in the early-mid stage of “premium death spiral” (PDS). That means premiums are rising very fast because insurers can’t do what they’re supposed to do with the money: invest it and turn a profit.

So instead of earning compounding returns… they’re racking up compounding losses.

Otherwise known as mathematical revenge from actuarial hell.

Eventually, probably over the next few years, all these plans will simply unravel. Poof. Gone. All that dinero down the drain and nothing to show for it.

Of course most people don’t believe this could ever happen because the gubbment will magically fix it with their magic n’ stuff.

Bad news for those folks. Insurance is math (actuarial science). It doesn’t care if you get a boo-boo on your feelings or if you’re an arrogant gazillionaire on your deathbed.

It’s all numbers numbers numbers.

And you can make them work for you or against you.

Here’s what I mean:

Some people are actually better off NOT having insurance ( or partially self-insuring).

If someone is paying, say, $1,000 a month in premiums, and only spends $5,000 a year in healthcare, they’re usually better off putting the $12K in a savings plan and buying supplemental policies to fill in the gaps.

Of course, everyone’s situation is a ‘lil different but you get the idea (I hope).

Anyway, if you want to know how to cleverly sidestep *some* of the problems in the healthcare industry, hop onto my email list.

David Lewis

This post brought to you by //The Rogue Agent//. David has been a life insurance agent, and worked with some of the oldest and most respected mutual life insurance companies in the U.S., since 2004. Learn more about him and his business, here.