What If I Didn’t Pay My Insurance Premiums?

Today’s big, fun outrage (and there seems to be a new one every day) is that most banks didn’t pay their FDIC insurance premiums between 1996 and 2006. Now, these were the free-for-all days of higher and higher profits, and banks didn’t feel they could spare the cash for insurance premiums. After all, it’s not as if they were going to fail.

To the FDIC’s credit (and I’m starting to think the FDIC is the only creditable government institution there is right now), the agency did try to collect the premiums. You know, be prepared for the future and all that. The FDIC went to Congress and asked that our legislators force payment. But Congress balked, instead pointing out that the fund was huge. And banks weren’t going to fail anyway.

How did that turn out?

Now, obviously, the FDIC still has to pay out even though the banks didn’t pay their insurance premiums. After all, it’s not the bank executives that suffer in such cases; it’s the rest of us hardworking stiffs. But this state of affairs is creating a situation in which the FDIC’s funds are rather strained. It might have to borrow money from the Treasury. Who pays the interest for that? We the taxpayers do! So I’m having a hard time finding it in my heart to feel bad for the banks. Especially since, on top of all of this, . Which means you are likely to pay even more money to these banks.

What if I didn’t pay my insurance premiums?

It is obvious that banks do not live in the same reality as the rest of us. If you don’t pay your insurance premium, you don’t receive coverage. It doesn’t matter if you paid faithfully for years. Miss a payment and your coverage is yanked. Which means there is no safety net for you in the event of a medical emergency. The bankruptcy laws aren’t even that helpful in such cases.

So, while the banks don’t have to be prepared for the future, if you want a good personal finance situation, you have to be.