Andrew Tobias - Demystifying Finance

 

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The Invisible Bankers

THE INVISIBLE BANKERS: Everything the Insurance Industry Never Wanted You to Know.

The subtitle tells it all. Did you know that only about a nickel of the premium you pay Mutual of Omaha for "flight insurance," if you buy it when you board an airplane, or that you pay American Express, if you sign up for its automatic coverage plan, goes to cover the actuarial cost of a crash landing? The other 95 cents or so goes to marketing, administration and profit. Did you know that people who die in fantasy-sex-hangings-gone-awry are often denied -- I should their heirs are often denied -- not only the double pay-off an accident is often supposed to trigger ("double indemnity"), but even the underlying promised pay-off itself. Life insurers -- at least back in the days of my research -- would sometimes claim the deaths were suicides (not covered if successful within two years of taking out the policy), knowing that family members would very likely be too embarrassed to contest it. (Okay, so maybe these situations are kind of rare. But every life insurance adjuster knows about them.)

It turns out, the insurance industry -- from insuring cars to bridges to Jimmy Durante's nose -- is fascinating. It's the ultimate casino.

"They only want us to THINK it's boring," was the title of one of my chapters. Because the more boring we think it is, the less we'll look into it.  And the less we look into it, the easier it is to take advantage of us.

Out of print and out of date. But most of the basic notions remain true.

A.T.