General Question

JackAdams's avatar

Isn't it about time we forever end Insurance Company discrimination practices?

Asked by JackAdams (6492points) August 27th, 2008

Back in the 1930s – 1960s, your insurance premiums were determined by your gender, age and race. Black males were rated highest of all, because the Insurance Companies (according to their racist & sexist actuarial charts), had so-called “statistical evidence” that they, as a group, had the worst mortality, and were more likely to die at younger ages.

Thankfully, Civil Rights legislation made it illegal to rate an insurance prospect, based on race and gender.

But, the insurance companies still discriminate based on age, and that’s just plain wrong.

The monthly premium amounts should be the same for a newborn baby, or an 80-year-old person, because no one knows the date of his/her death, and newborn babies can die of SIDS, and 80-year-olds sometimes live to be 100.

So, because no one knows when someone else will die, insurance should be sold as “one premium fits all,” and let’s toss those meaningless tables.

The Insurance Industry (as a group) should be sued for practicing “age discrimination.”

August 27, 2008, 8:57 PM EDT

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21 Answers

Harp's avatar

If we did that, then everyone in the lower-risk groups would pay considerably higher premiums, and those in the higher-risk groups would pay much lower premiums. That would have the effect of causing many low-risk people to opt out of insurence altogether, because they’d perceive that their level of risk was not worth the cost of the insurance. Meanwhile, high-risk people would sign up in record numbers for the opposite reason.

This would have the effect of increasing the riskiness of the pool as a whole, which would drive up costs, which would drive up premiums, which would cause even more low-risk people to opt out, etc.

I disagree that the actuarial tables are meaningless. They are constantly updated to reflect current trends.

jrpowell's avatar

I would rather that we get rid of insurance companies. Check how much profit these companies make. They are middlemen with profit on the mind. Let the state take care of health care.

JackAdams's avatar

What about life insuance?

August 27, 2008, 9:20 PM EDT

Harp's avatar

Even worse. People are notoriously unrealistic concerning their mortality. People wouldn’t consider getting life insurance until they were well past the current median age of the insurance pool, so the same disastrous financial cycle would result.

JackAdams's avatar

But, you DO get my point, that ALL forms of age discrimination are WRONG, just as all forms of race and gender discrimination are wrong?

It used to be, that insurance companies would not give you a quote over the telephone, because they wanted to see what you looked like (your race) before they could offer you a quote.

I’m glad those days are gone forever.

August 27, 2008, 9:39 PM EDT

Harp's avatar

There is one difference between age discrimination and the other forms of discrimination that you cite, namely that whereas the others favor or disfavor certain individuals over the course of their entire lives, every individual can expect to be treated similarly at the various stages of life.

Seniors and children get discounts at performances. A 25 year-old can’t be elected President. A 20 year-old can’t drink. I can’t collect Social Security. I can’t ride Chicago public transit for free like my mother-in-law can. Are all of these examples of discrimination wrong? Should they all be disallowed? Or do we just accept that we all enjoy some benefits and some burdons at each stage of life?

JackAdams's avatar

@Harp: You make some excellent points. In Hawaii, residents are given discounts at shops and attractions (called the “Kamaaina Discount,” as long as you have a state ID or Hawaii DL). In Boulder, Colorado, after a successful lawsuit, “Ladies Night” at a bar was eliminated, so “the babes” no longer were charged less than the males, for drinks.

In Rochester NY, a successful lawsuit filed by the “Topfree Five” resulted in a judge’s ruling that if men could swim topless in public (or sunbathe topless) so could females, and that ruling stands, to this day.

Denny’s Restaurants has eliminated the “free meal on your birthday” promotion, even though everyone has a birthday anniversary.

One CAN collect certain forms of Social Security (such as SSI and “Survivor’s Benefits’).

And, there are indeed plenty of places that offer Senior Citizen Discounts to those past age 55.

But, my question didn’t specifically address those things, did it?

I was talking about age discrimination in the insurance industry.

I think it’s wrong to discriminate based on age, because no one knew (except the pilots) that all those people were gonna die on 9–1-1, did they? All those people of various ages, all died on the same day, and many of them had life insurance.

August 27, 2008, 11:24 PM EDT

Poser's avatar

@johnpowell—That was one of the most blatantly anti-American sentiments I’ve ever read. I hope you meant it in jest.

srmorgan's avatar

The whole purpose of insurance:, life, property, liability, commercial, fire, burglary, fraud, machinery, worker’s compensation, short-term disability, long-term disability and yes, even health insurance are based on the sharing of, and avoidance of RISK.

I insure my life so that my wife and children will have some form of monetary protection if I, the primary breadwinner, were to die and leave them without a source of income. I purchased insurance when my first child was born 24 years ago and essentially the life insurance company made a bet with me: if I pay the premiums and die they will pay my wife a bunch of money. They are betting that they can take my money and earn enough off of it over the remainder of my life so that they can turn a profit. If I live to be 98 like my maternal grandmother, they make out like bandits. If I had died at 54 like my mother (I was 59 on Tuesday) they lose money.

You take enough people like me, pool them together and based on statistical tables that predict human longevity in long broad brush strokes, they set a premium rate and it is my decision whether to purchase a policy,

As to discrimination: when I was first insured in 1984, I was 45 years old and in great health. The low premium reflected that. We made a contract that so long as I paid the premium every quarter, they would pay out a benefit to my wife,
Now 24 years later, I have developed high blood pressure, diabetes and had a heart incident that earned me a pacemaker. Do you think that the current state of my health shouldn’t mean that I have to pay a much higher premium in order to get that benefit for my wife and kids? With my health issues, my prospects of longevity are a lot slimmer than they were in 1984. But the quarterly premium remains the same, they signed a contract with me and both sides adhere to the contract.

My company is located in the “100 year flood zone” which did not prevent us from being flooded in 1996 and 1999. Our property premiums went up based on our experience ratings. Is that not logical? Should a business in the same size building on the top of a mountain pay the same flood insurance rates as the company situated on the banks of the river? Without insurance that paid a claim of over $2 million we would have been out of business and 60 people would have lost their jobs.

The same principle extends itself throughout the industry. If my employee census shows 40% females between 25 and 35, don’t you think there is a higher likelihood that we will experience one or two pregnancy claims every year? If the profile is 80% male over 55, won’t our insurance claims be higher, on average, than a McDonald’s franchise where 90% of the staff is under 21?

I can go on and on about this and I do not work in the insurance industry and never have done so. And I share the opinion that the medical insurers are a bunch of thieves but don’t make blanket statements that don’t make sense if you actually spend a few minutes and think about it.

SRM

Response moderated
Poser's avatar

@jp—Good idea. I’d rather get my money’s worth from my child’s education. Who says health care is a basic human right? Even if it is, what person in his right mind would think that the government is the best entity to provide it? The government can’t do anything well, except steal money from it’s citizenry and waste it on bullshit.

It’s funny how you complain about people using your tax dollars for something that you don’t care about such as flood insurance, but get hostile when someone suggests that their tax dollars shouldn’t be used on something you do care about.

JackAdams's avatar

What I don’t think has been mentioned, is that an insurance company can refuse to cover you, at their discretion.

If you were 95, for example, and wanted to purchase a term life insurance policy for 10 years, just how many insurance companies do you think would want your business?

It’s my bet that every one of them would refuse to write you a policy.

Colonial Penn Life Insurance company refuses to write any new policies on folks 85 or older, and if you sign up at 75, your policy gets cancelled on your 85th birthday anniversary, I’ve been told.

A “fine” way to treat our elderly, isn’t it?

August 28, 2008, 4:38 AM EDT

Harp's avatar

@Jack
Your original question didn’t specifically address those things, but you brought them into play as soon as you said ” ALL forms of age discrimination are WRONG, just as all forms of race and gender discrimination are wrong”. Or would you hold the insurance industry to a different standard than other social and commercial institutions? Wouldn’t that be yet another form of discrimination?

JackAdams's avatar

I stand by my statement that all forms of age discrimination are wrong, but I realize that there are those who will claim that by making such a statement, that I am saying that there should be no minimum voting age, and that someone under 18 should be permitted to “act” in a porno movie, or drink hard liquor.

I’m not advocating those things, mainly because other laws currently on the books specifically address those subjects, as well they should.

I’m just saying that, because a person’s death date cannot be predicted by anyone, including actuarial charts, the insurance industry should remove age considerations from the amount charged for a person’s premium, just as gender and race considerations were removed.

We can’t predict what would happen, until it was actually implemented.

August 28, 2008, 8:32 AM EDT

Harp's avatar

Jack, is this going to be yet another of those occasions where you ask the opinion of the collective, and then just stand over by your position and chant it like a mantra?

srmorgan's avatar

@jackadams

You are missing the point completely.

If you are 95 years old, then it could be said with almost 100% certainty that you are not going to live an additional 30 years. If you are 5 years old, it could be said that with almost 100% certainty, that you will live an additional 30 years.

Therefore, if you as the insurer, enter into a contract to pay a death benefit of say $10,000 to either of our two examples, you suggest that each policy should carry the same premium?

I don’t want to get into the statistical assumptions made in the underwriting process but think about this for a minute and try to convince yourself that you are still correct.

My 85 year old father had open-heart surgery last November 5th and it was perfomed because it was the only way to try to prolong his life. Under your suggestions, I could have been able to go to an insurance company and demand that they write a life insurance policy for a significant sum of money for an old man whose prognosis was dreadful and who obviously was not going to live for an additional 20 years, make that 10 years, at the same premium that they would quote to my 24 year old daughter??
Get real.

My father passed away on November 25th, the insurance company wouldn’t have time to cash the first premium payment if we could have bought a policy. That’s what you would get if your idea stuck.

The result would be that no one would be able to afford life insurance because no one in his right mind would enter into that sort of contract.

Think about that, at some point in the future, when your spouse tells you she is going to have your first child.
SRM

JackAdams's avatar

I agree with everyone who thinks that I probably have an wrong attitude, and if I owned my own insurance company, I would probably not be all that enthusiastic about writing a policy for a very old person, nor would I leap at the chance to write one for a very young person who has a serious physical ailment that will probably kill him/her, in a matter of months.

I had a life insurance policy once, that would pay $3 million to my beneficiary. I was required to submit to an extensive physical examination, paid for by the insurance carrier, before the policy would be written. My health turned out to be excellent at that time, and my age was a factor in the amount of the premium that was mandated.

However, I remember about a toddler who lived across the alley from me in the 1950s, and his parents had insured him for $100,000, which was a sizeable amount of change, during that decade. He developed leukemia and died at age 4 or 5, as I recall.

According to the actuarial charts, he should have lived to age 70 or so, so naturally, his folks were given a low premium, because the policy was written when he was only 14 days old. (With some insurers, a child cannot be insured, I am told, until it is 2 weeks old.)

My “point” again stated, is that charts and tables don’t foretell when a person will die, nor how. The insurance company is betting that the person will live out a normal lifespan, so they can make a profit on the person (nothing wrong with that, of course), but they are required, by the terms of the contract with the insured, to pay “X” number of dollars to someone, should you die.

True, an 85-year-old person doesn’t have a great expectation of living past his 100th birthday anniversary, and could die the day after the policy was written. So could a 20-year-old.

That’s the reason I advocate a “one size fits all” policy premium, that is not based on age. And, as someone else will eventually point out, the amount of the payment to the beneficiary is a factor in the amount of the premium,

A policy paying $100,000 will have a higher monthly premium, than one paying $10,000 or $10,000,000, and that’s as it should be. But please consider this:

I once purchased flight insurance from a vending machine at an airport, many years ago, and at that time, I could buy $5,000 worth of coverage for $1 (as I recall; don’t hold me to that figure).

I purchased $25,000 of coverage for $5, printed out the policy copy and mailed it to my beneficiary, as suggested. And, here’s my “point” in relating that:

The premium amount was not based on my age, at all. Any passenger on that exact-same flight, had to pay the exact-same amount as I, and probably because it was only good for that one flight (from take-off to landing) and once I deplaned, the policy became null and void.

So, if an insurer can cover you without age being a consideration on a single flight, then the insurer has established a precedent, that illustrates (by such an example) that age doesn’t need to be considered as a factor, in the writing of a policy.

And again, those who think my attitude is wrong, are probably indeed right about that.

But, have YOU ever had an “unpopular” attitude about something? Were YOU ever in the minority, regarding your own beliefs and attitudes? If so, then my taking the stance I have taken on this subject, should not be all that “foreign” to you, and even if my opinion flies in the face of “logic,” it is still my opinion, and should be respected, even if you do not agree with it.

My questions are usually authored because I seek a genuine answer to something I don’t know, or I seek the opinion of the collective, or, as previously stated, I wish to take the “Devil’s Advocate” viewpoint, because I seek to encourage robust and intelligent debate on a subject, so I can improve myself (and perhaps change some of my attitudes) with the input of others.

What no one needs in here, is to be insulted or chastised, simply because s/he doesn’t think as some of you believe that s/he should.

I respect the opinions of those who disagree with me, and you’ll notice, I hope, that I do not lower myself to insulting or disparaging those who don’t believe as I believe.

Wouldn’t this be a lousy world indeed, if everyone agreed with everything YOU (collectively) said or believed?

Progress and improvements spring from disagreements and the intelligent discussions of such.

August 28, 2008, 3:12 PM EDT

srmorgan's avatar

@jackadams
I have responded to your last posting privately.

As I told jackadams, my postings were not intended to be of a personal nature and I retract anything that might be perceived that way. That is not what I was trying to accomplish in my comments.

As I also told jackadams, I think he is missing the point of insurance completely but that is strictly a difference in viewpoints and not a comment on his or her personality, intelligence, experience or place of stature in the Fluther community.

I just plain flat out disagree with jackadams but I did not intend to commence a flame war about this. That is not how I like to post on Fluther.
[
SRM

Poser's avatar

“On a long enough timeline, the survival rate for everyone drops to zero.”

Insurance companies are effectively betting on your life; simply playing the odds. My odds are better, as a 29 year old healthy male, than my 80-something grandfather. I’d bet on me over him.

Harp's avatar

The flight insurance was covering you for accidental death in case of flight accident. Age has no bearing on whether or not you’ll die in a plane crash.

But, in the case of a general life insurance policy, you’re covered for many contengencies in which age is a strong statistical factor.

JackAdams's avatar

The comments of SRMorgan were NEVER taken “wrong” by me.

They did not offend nor insult me in the least, and I continue to welcome his remarks and respect his opinions, regardless how much they may differ from my own.

Healthy debate (with respect for everyone’s opinions) is what I encourage.

My oppinions are subject to change, and if someone can change the way I feel about an issue or topic, I’ll have no hesitation about publicly acknowledging that, and giving proper credit to the person (or position) that caused me to re-think my own position.

I’ve had my opinions changed on a variety of topics in the past. For example, I used to be anti-abortion, and am now, “Pro Choice.”

I was a card-carrying Republican, until I discovered their secret agenda.

So yes, I can indeed change the way I think, once confronted with emotion-free arguments.

I used to vote in every election, until voting caused the death of a friend of mine, and I will never vote again.

August 28, 2008, 4:38 PM EDT

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