The Madman's Guide to Insurance

I've had to deal with insurance quite a bit lately and like many of you, I find it to be quite frustrating. To correct this, I've done my research and am now in a position (seated) to explain the ins and outs of insurance terms and practices.

What is insurance?

A definition is always a good place to start. Insurance is a means by which risk is pooled among a population of people. The assumption is that if we average people's risk over a large group, our risk will be less.

Let's look at an example. (Those of you that are math averse should look away) Suppose that my risk is "x". Your risk is "x" too. Together, our total risk is x + x. In case you failed algebra, x + x = 2x. Now, to find our average risk, we divide our total risk by the number in our group. This is written as 2x/2. Those of you that didn't fail algebra can see where this is headed. Our average risk is x. Nothing has changed.

But wait! you say. "Madman, you're overweight and to call your lifestyle sedimentary would demean an entire classification of rocks!" - you also say. (That was a little mean-spirited and hurtful, I'd reply) This is where the magic happens. If my original risk was 2x and yours was only x, our average risk would be 3x/2 or 1.5x. You've just inherited some of my risk and I thank you for it. Insurance counts on people with low risk, also known as "pigeons", to join together with high risk people, also known as "Kevins" to pool their risk.

How do I get insurance?

You purchase insurance from someone known as an "agent". They prefer to refer to themselves as agents because of the negative connotations associated with the word salesman. When you hear the word agent, you instinctively think of something mysterious and perhaps a little dangerous, like a James Bond type "secret agent". No one is intimidated by a "secret salesman". Real estate agents work on this same principle. They've even gone so far as to create a whole new word "realtor" to avoid being called salesmen. I fully expect insurance agents to adopt this strategy and start calling themselves insurators.

What happens when I need to use my insurance?

The short answer is "Sucks to be you."

The long answer is, first you file a claim. Suppose that you go to a doctor or dentist or auto repair shop, it doesn't matter, the process is the same. You go in with a problem, get looked at and them get a bill. If you're lucky, they'll file a claim for you. They'll contact your insurance company and get told "No. That's not covered." It doesn't really matter what "that" is. It's not covered. You could have purchased a policy titled "Insurance against death" and your death would not be covered. If you were to actually read your policy (no one has ever done this) you would see that a small addition to an obscure sub-section that is written in Sanskrit (you do read Sanskrit don't you?) specifically states that "No payments shall be made in the event of accidental or non-accidental life stoppage." You should have bought the life stoppage policy but it wouldn't really have mattered because it would have its own obscure sub-section that stated that life stoppage is only covered in cases of extreme polyantimorphism and your case wasn't extreme enough. Plus, it was a pre-existing condition.

But surely insurance companies pay sometimes.

Yes, in extreme cases, they do. They pay what is known as "usual and customary". Bear in mind that nothing is usual or customary to an insurance company.

During the Civil War, if a soldier was wounded, it was customary to amputate a leg. It didn't matter where or how serious the wound was, a leg would be amputated. Upon seeing the reluctance of soldiers with acne to visit doctors, insurance companies seized upon customary procedures. So, if you need a leg amputated, by all means, go to the doctor.

Unfortunately, the pay scale has not changed in the past 150 years either so you'll need to find a doctor that will either take your Blue Cross/Blue Shield card or accepts payment in chickens.

Is it really that bad?

Yes.

No. I mean, is it really that bad?

Yes.