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Comment by ytdytvhxgydvhh | Hacker News Reader

> Buying insurance on something you already know is going to happen or not is fraud, plain and simple.

I don’t think that’s quite the right definition. I know I’m going to die. I bought whole life insurance. I have not committed fraud.

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There's actually a different term for that - assurance is to compensate for things which are known will happen (e.g. you will die, at some point), insurance is for things which you don't (you will die during the finite term of the policy).

So technically you bought life assurance.

Perhaps consumer products are playing fast and loose with the technical terms because everyone says they want "insurance".

Is there a third term for something like "flood insurance", where there will definitely be a flood at some point—you're building on a floodplain—but not necessarily one within the lifetime of the policy, such that in theory profit can be made off of e.g. business that open, get insured, operate for years, and then close, without the flooding ever happening.

...but where there is a legal requirement for everyone in the area to "get insured" so that they don't have to lean on FEMA, and therefore in practice there's the opposite effect to the distribution of risk under public healthcare: rather than forcing healthy people who will get negligible benefit from their policies to get insured, such a requirement forces the insurance company to not be playing the lottery by offering only short-term policies that can maybe avoid a flood, but instead fixes them into always ending up covering a resulting flood (and therefore almost always defaulting in such cases and needing reinsurance coverage.)

No. You don't know, that you'll die before the average time on which people die that was used to calculate the insurance fees.

So it’s more like gambling then, but if you beat the house, that’s fraud

In this case, the better analogy would be beating the house by exploiting a flaw in slot machines that you knew about because you used to work for the manufacturer.

That isn't how whole life insurance works. You are thinking of term life insurance. Whole life is basically an investment package that invests your premiums and pays out to your beneficiaries upon death.

Exception that proves the rule, there. The insurance company knows you'll die too.

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