Question

There are many private companies selling life insurance and there is virtually no problem associated with that market. On the other hand, many people like insurance to smooth their income over the business cycle, especially people working in the growing gig economy where their alternating periods of employment and unemployment. But no one sells income insurance.

1. Why do competitive markets work better for life insurance than for income insurance?

2. Why are governments able to provide this type of insurance when private companies cannot provide it?

Answer 1

There are many private companies selling life insurance and there is virtually no problem associated with that market. On the other hand, many people like insurance to smooth their income over the business cycle, especially people working in the growing gig economy where their alternating periods of employment and unemployment. But no one sells income insurance.

1. Why do competitive markets work better for life insurance than for income insurance?

2. Why are governments able to provide this type of insurance when private companies cannot provide it?

Answer: competitive market work better because they focus their young consumers. Consumers now a day can find the best insurance provider just by searching it on internet. As there is increasing demand if digitalization. In this digital world insurer company always try how to reach and meet all demand of insurer. To stay competitive agent of insurance companies always focus on the need of young consumers who wanted to get insured.

In the case of income protection the main problem fir the self employed individual is the price they willing to pay to get insured. They struggle in knowing affordable price . However in many cases no claims being made.

Answer: many of the consumers go to public insurance rather the private because they have more faith in public sector than the private one. Public program target those who are unable to meet certain eligibility criteria or have less income. Fed and state government work to children, women low level individual.medicare insurance provided by the fed that is for old (65) years of individuals. There is evidence that at low premium individual get more profit at health level. It is only possible for fed or state government to provide insurance at low premium.

Hope answered your questions thank you.