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Tangentially related… Life insurance companies (in the USA 20 years ago when I sold it) would require a medical exam for every life insurance application. If

Tangentially related… Life insurance companies (in the USA 20 years ago when I sold it) would require a medical exam for every life insurance application. If the applicant commits fraud by having someone else take the examination (usually a blood draw, height and weight measurement, and maybe a heart EKG for bigger policies), the policy is considered valid after two years. Even if the insurance company finds out fraud was committed, the benefit payout is guaranteed after two years.

Null-Set 3y ago
The implication being that after 2 years the immediate risk of death the insurance company wants to protect itself against did not come to pass, so the policy holder should not have the risk of losing their policy to a post mortem determination of fraud from the insurer despite believing they were insured. Taken back to the fraud in interviews, you could make the same argument that after some time working on the job and not gettimg fired, the risk of getting someone not actually qualified did not come to pass, so its more useful to look at the employees current performance than their original fraudulent interview.
- rahimnathwani 3y ago
  But the bar for firing is below the bar for hiring. This is true not only because of status quo bias, sunk cost etc., but also because employers will often try really hard and be very patient, in the hope that an employee's performance will improve.
bombcar 3y ago
Sounds similar to how (most? all?) life insurance policies will pay out for suicide after a two-year waiting period - the idea being that those who are dedicated enough to plan out that far in advance don't actually end up going through with it, or it's a rounding error. So perhaps the medical exam stuff should be swapped around; everyone can get life insurance, but if you want payout for certain things to kick in before two years, you get a medical and pass.
- devoutsalsa 3y ago
  I think any insurance company would have a lifelong suicide exclusion if they could. I’m pretty sure they are legally obligated to pay after two years, as it’s be too easy for nearly any insurance company to claim most deaths were possibly a suicide. The main point being that you can’t pay the mortgage on your house, which may be the sole reason you got life insurance, if the benefits aren’t being paid out. Also, there are some policies that do have limited benefits the first two years. This is especially common for any type of insurance that doesn’t require a medical exam. They tend to be very expensive for the amount of insurance they provide, but maybe have a manageable monthly payment because the amount of coverage is relatively low. This type of insurance is usually “I can’t qualify for anything else” coverage, or it’s for a very specific purpose, like paying for funeral expenses when for some reason the person didn’t have the desire to just save that money in the bank.
  - bombcar 3y ago
    The problem for the industry with the "no questions asked" plans is the only people who sign up for them are the ones who have no other option, which makes them more expensive, which makes the only people who sign up for them ... etc etc etc.
    - devoutsalsa 3y ago
      Yes. There’s a few factors: - higher premiums for everyone because the pool of applicants aren’t that healthy - the super sick people simply die in the first two years - the semi sick people can hang on for years, but weak health may me limited ability to pay because of limited employment prospects - the not sick people will find better prices or simply realize the insurance is overpriced and cancel it
  - philsnow 3y ago
    > I think any insurance company would have a lifelong suicide exclusion if they could I suspect you're right. There certainly are desperate people who go to Vegas, lose their entire savings, and choose to end their life because they're not willing to put in the work to continue trying to survive for another, say, 40 years, starting with zero assets. There are also people with severe mental illness (poor/no executive function, prone to psychotic episodes, imbalances in their brain chemistry) who make poor choices or don't even consciously make choices but their body is nonetheless doing things, who end up also choosing to end their lives. There is overlap between these two groups. How could an insurance company decide which is which? If cancer can kill you and they pay out for that, why would they not pay out for deaths due to mental illness? Because they can. We're becoming more willing to talk about mental health, but there's still a ways to go. There's a ton of stuff that can go wrong with the mind and I couldn't hazard a guess at what proportion of people are 100% okay.

Null-Set 3y ago

The implication being that after 2 years the immediate risk of death the insurance company wants to protect itself against did not come to pass, so the policy holder should not have the risk of losing their policy to a post mortem determination of fraud from the insurer despite believing they were insured. Taken back to the fraud in interviews, you could make the same argument that after some time working on the job and not gettimg fired, the risk of getting someone not actually qualified did not come to pass, so its more useful to look at the employees current performance than their original fraudulent interview.

rahimnathwani 3y ago
But the bar for firing is below the bar for hiring. This is true not only because of status quo bias, sunk cost etc., but also because employers will often try really hard and be very patient, in the hope that an employee's performance will improve.

bombcar 3y ago

Sounds similar to how (most? all?) life insurance policies will pay out for suicide after a two-year waiting period - the idea being that those who are dedicated enough to plan out that far in advance don't actually end up going through with it, or it's a rounding error. So perhaps the medical exam stuff should be swapped around; everyone can get life insurance, but if you want payout for certain things to kick in before two years, you get a medical and pass.

devoutsalsa 3y ago
I think any insurance company would have a lifelong suicide exclusion if they could. I’m pretty sure they are legally obligated to pay after two years, as it’s be too easy for nearly any insurance company to claim most deaths were possibly a suicide. The main point being that you can’t pay the mortgage on your house, which may be the sole reason you got life insurance, if the benefits aren’t being paid out. Also, there are some policies that do have limited benefits the first two years. This is especially common for any type of insurance that doesn’t require a medical exam. They tend to be very expensive for the amount of insurance they provide, but maybe have a manageable monthly payment because the amount of coverage is relatively low. This type of insurance is usually “I can’t qualify for anything else” coverage, or it’s for a very specific purpose, like paying for funeral expenses when for some reason the person didn’t have the desire to just save that money in the bank.
- bombcar 3y ago
  The problem for the industry with the "no questions asked" plans is the only people who sign up for them are the ones who have no other option, which makes them more expensive, which makes the only people who sign up for them ... etc etc etc.
  - devoutsalsa 3y ago
    Yes. There’s a few factors: - higher premiums for everyone because the pool of applicants aren’t that healthy - the super sick people simply die in the first two years - the semi sick people can hang on for years, but weak health may me limited ability to pay because of limited employment prospects - the not sick people will find better prices or simply realize the insurance is overpriced and cancel it
- philsnow 3y ago
  > I think any insurance company would have a lifelong suicide exclusion if they could I suspect you're right. There certainly are desperate people who go to Vegas, lose their entire savings, and choose to end their life because they're not willing to put in the work to continue trying to survive for another, say, 40 years, starting with zero assets. There are also people with severe mental illness (poor/no executive function, prone to psychotic episodes, imbalances in their brain chemistry) who make poor choices or don't even consciously make choices but their body is nonetheless doing things, who end up also choosing to end their lives. There is overlap between these two groups. How could an insurance company decide which is which? If cancer can kill you and they pay out for that, why would they not pay out for deaths due to mental illness? Because they can. We're becoming more willing to talk about mental health, but there's still a ways to go. There's a ton of stuff that can go wrong with the mind and I couldn't hazard a guess at what proportion of people are 100% okay.