Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

13 Ellul 5766 - September 6, 2006 | Mordecai Plaut, director Published Weekly










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Shema Yisrael Torah Network

Opinion & Comment
The Areivim Plan: Life Insurance that Nourishes the Soul

"What is it that distinguishes the thousands of years of history from what we think of as modern times?" What is "the revolutionary idea that defines the boundary between modern times and the past"? A hint: It is something that "goes way beyond the progress of science, technology, capitalism, and democracy." (All quotations from the introduction to, Against the Gods, the Remarkable Story of Risk, by Peter Bernstein, unless otherwise noted.)

According to Peter L. Bernstein, dean of US financial writers and author of a monthly financial letter which (according to its promotional literature) is read by an audience that "own or manage assets of more than five trillion dollars," that key idea is the management of risk: "how to understand risk, measure it, and weigh its consequences."

Bernstein argues that understanding risk and being able to measure the amount of risk associated with various investments is crucial to the buildup of modern society and its means of production. If we only know that something is risky, but not how risky, then we have no way to choose between investing in that or in something else that is also risky. We would have no way to compare the two risks.

Moreover, without the modern tools of risk management, including insurance and large parts of the world financial markets, a lot less would get done. If farmers and agricultural companies could not guarantee themselves a minimum price for their harvest — which they can do by selling all or a part of it on the futures market before they even plant the seeds — they would no doubt produce much less. If businesses could not diversify the risks they undertake in doing big projects by selling insurance, which is resold to third parties, many important projects would probably never leave the drawing board.

Even if we are a bit skeptical about some of the extreme claims that Bernstein makes for the importance of risk management, it is clear that it is a development that has been very important in the achievement of many of the material gains of the modern world.

This is background to understanding the significance of the new programs announced this week by Kupat Ha'ir of Bnei Brak and the Vaad HaRabbonim LeInyonei Tzedokoh. With minor differences, they bring interested families together in very large groups (10,000-12,500) in order to provide the effects of an insurance policy. However the exact rules of the plan are different from the insurance industry in significant ways.

There are no monthly premiums. Rather, in the event of the death of a parent of one of the families in the group, each family agrees to pay $5 (or $4) on a one-time basis for each of the orphans. This provides a fund of $50,000 for each orphan which is supervised by the rabbonim of the charity, and is to be used primarily to pay the marriage expenses of that orphan. (The rules also provide for a cap of $18 (or $16) in one month, so that the one-time payments may have to be spread out over several months if there are many orphans in one month, R"l.)

Mr. Bernstein writes, "Our lives teem with numbers, but we sometimes forget that numbers are only tools. They have no soul . . . "

These new plans are a very welcome initiative to deal with a recurring problem in a proactive way, rather than just responding to the tragedies as they arise as has been done up until now. Developed together with today's leading Torah authorities, the result is risk management that also attend to the soul. It should be noted that they differ in subtle but enormously important ways from traditional insurance.

In buying a traditional insurance policy, the considerations are just those of any business decision. Do the benefits of the promised payout justify the cost of the monthly premium?

In this new plan, since they are applied directly to providing funds for orphans, the payments are pure charity. (This can make the plan attractive even to those who have married off all of their children.) Participants receive the benefits of classical insurance because of their commitment to give charity on demand. In a moral sense, that is a pure win-win result.

Also, the plan promises to be a success even though no one will be making any monetary profit from its execution. Although profits are certainly not evil per se, it is certainly in its favor that the plan does not require them in order to work properly. As we are so often reminded these days, profits breed greed.

Let us hope that this plan will help the soul of Klal Yisroel while it helps to manage the inevitable and unrelenting risks of its body. (Contact: 1599-513-517; or 03- 671-6930 to join or for more information.)

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