Friday, November 9, 2012

Considering Insurance

Yesterday I received a letter in the mail from my dentist.  It warned me not to miss out.  I may lose some dental benefits if they are not used by December 31.  They wanted me to "call the office today!"  Needless to say, I didn’t call the office, but I did wonder about how people think about insurance.

Part of the problem is that people who get insurance through an employer don’t pay the full premium.  Coverage is a benefit of employment.  If they don’t collect it all, they may feel like they’ve lost out, left money on the table.  Otherwise, if they do pay the full premium, this artificial year-end deadline highlights the amount they could have claimed.  Again, it may feel like lost money.  People don’t want to feel cheated, and this dentist is trying to take advantage of that feeling to drum up business.

Unfortunately there are two factors that offset that cheated feeling.  First, most dental insurance has a deductible and/or co-pay for any work that’s not purely preventive.  I would not be able to use up the available money without paying something myself, plus I get to have my teeth worked on.  Neither of those prospects sounds enjoyable.  Second, if everyone used all available benefits every year, the cost of insurance would go up.  When they calculate premiums they take into account the level of usage, the fact that some people don’t go to the dentist as often as they should and that few use their entire allowance.  This gets back to magic-money-tree thinking.  Insurance companies can only pay out money they have and they get that from us and/or our employers.   It’s not just sitting there waiting to be spent.

Finally, this way of thinking seems a little strange overall.  I don’t feel bad at the end of the year because I paid for homeowner’s insurance and my house didn’t burn down, or because I paid for car insurance and I didn’t have a crash.  I want to use most insurance only when necessary, and then I’d rather that the need hadn’t arisen.  I even do things to ensure that I didn’t need to call on the insurance company, install smoke alarms, drive carefully, eat right, exercise, not take unnecessary risks, etc.  This keeps my personal premiums (and premiums in general) low.  Why should it be any different for dental insurance?

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