How to make sure you get to eat food when you don’t have anything to cook. You ask everyone in the villagers to get whatever they have and come to the center of the village.
You pool together whatever the villagers have. And then cook the food in a huge utensil. Comprising all ingredients collected. And now there is a giant pot of nutritious soup.
And everyone enjoys the soup. Including you. That’s the essence of insurance.
You give some amount of money every period. Among many others. And when someone is in trouble, they get the amount to benefit.
But there are different nuances to how this can work. Primarily there are two major differences in insurance. Let’s explore them.
Life & Medical Insurance
The first is life insurance. Where your life is covered. And you aren’t paid unless you die or lose limbs.
Often this is disguised as investment. So if nothing happens to you, you are given a specific amount back after the period of payment is over.
Another is medical insurance. Where you are covered for medical expenses. And if nothing happens to you. Nothing is paid back to you. So all the premium amount you pay is their profit.
Everything seems to be all good. Then what’s the problem. It’s in the details. Often it is.
The Pay Off Scam
Insurance is a lucrative business. Imagine taking a $10 premium from 100 people. Chances are that only one of them will need medical expenses. So you pay $50 as medical expenses. Rest get nothing. And you pocket $50.
Scale this up and chances of people needing medical expense go low and the amount of money you get skyrockets.
At this point, you realize – if you are an insurance company, you can make a good amount of profit by being genuine.
But there are details. Fine print. And you don’t read it. Even if you do, you can’t remember or control what happens to you.
So imagine you needing a medical expense for kidney transplant. In fine print, they say – they only cover medical expenses after you have paid 3 years of premium. And now, you don’t get anything.
And the insurance companies get even more profit. And there are many such clauses, where many people don’t get the benefit when they need it.
Deep down, you know of this scam. Ideally you should be relieved when you buy insurance. But you know that there will be something which will happen to you. And not be covered in the details,
Also, there are steps which you need to follow to claim your deserving money. But it takes a lot. Almost, like you are stealing money.
The Way Forward
Like everything this is a chance. Many insurance companies – almost – work like this. And so there is a vacancy for an insurance company who keeps the customer at the highest point.
An insurance company who is happy with the minimum profit. If it means they can help a large number of people in times of need.
Of course, you do due diligence. But make sure your claim process is inclusive of many conditions and not denying claims for silly or small mistakes.
At the heart of it, having empathy and doing business in an ethical way is the key. You will still land a good profit. Nothing in comparison to other insurance companies. But enough that your company will stay afloat.
And the best, you will leave a positive impact. And you will pave way for more such business. A legacy worth spreading.