At its recent annual meeting, the Rabbinical Council of America called upon all Orthodox Families to purchase life insurance of at least $1,000,000 for the breadwinner and $500,000 for the spouse. The RCA points out that there are numerous occurrences of young parents passing and that the fundraising efforts that follow put a tremendous financial strain on the Jewish community.
The RCA puts forward the following suggestions to encourage the fulfillment of this resolution:
- Institute the Zichron Dov life insurance fund in every shul to ensure that every member of every shul has life insurance.
- Educate young brides and grooms on the importance of buying life insurance before marriage.
- Lobby their local schools to provide life insurance for every teacher working more than 20 hours a week, increasing tuition by no more than $20 a year.
- Speak from the pulpit one time during the Yomim Noraim on the importance of this issue.
- Compile lists of insurance brokers in their respective communities to make the process easier for every congregant and student.
These are all fine suggestions and if you keep reading you will see that I have some of my own (bolder) suggestions.
I believe that an insured Orthodox public is vital to the financial health of the community. I wrote about the important of life insurance in one of my opening posts and received positive feedback. I still believe that many young couples do not have life insurance and was pleased to see the RCA put forward this resolution (I plan to increase my premium as suggested, my husband's policies total a bit over the proposed million).
Over at Hirhurim, I had an exchange with a commenter who thought that the life insurance recommendation was excessive. He wrote "The RCA's resolution on insurance is plain silly. Life insurance depends on circumstances. 1 million assumes a high income-like residents of Woodsburgh, Fieldstone etc. typically have. How many times replacement economic value does the RCA feel people must have. You don't want a spouse to be better off if the other spouse dies."
In sum, I wrote that if anything the recommendations were probably too low (although reasonable nonetheless). In many homes, if the primary breadwinner were to pass away (or loose a job), the secondary income earner (or potential income earner) would very likely be unable to pull in enough cash to support the necessary regular monthly expenditures, much less the massive tuition expenditures that they were incurring or are sure to incur in the future. I also pointed out that a death of a parent/spouse is extremely jarring and that "being forced to sell a home, pull kids out of day school, etc because of that death would be horrific."
The poster I was conversing disagreed with my assertion that the kids would have to be pulled out of day school, writing, " the one time they will generally give scholarships is in the fortunately rare case of young breadwinner being niftar. Of course, they more than make up for it in Scholarship Dinners etc."
While the poster is correct that schools generally come through in the face of such tragedy, I think the RCA is making a very reasonable suggestion. I would estimate that no matter how you cut it and no matter where, a family will need somewhere around $150,000 (probably more) in today's dollars to educate each child that they have for the years K-12 alone. I read that the average Orthodox family has 4.5 children. A family with 4-5 children who looses their primary income earner will need a massive amount of funds. Either the living spouse (and/or their family) will need to provide the funds, or the community will need provide the funds.
Due to the tremendous strain already on the Orthodox community, it is certainly a reasonable request that we all buy adequate life insurance policies. The question is, how do we get the job done?
Above I posted the RCA's proposals to encourage life insurance. Here are some additional proposals of my own:
1. Work with the Agudah (and Chabad and Chassidic groups) and encourage them to put out their own "takanahs." G-d willing such a takanah will be more successful that the infamous simcha guidelines. My anecdotal evidence would suggest that the families that most need to hear this suggestion are not affiliated with the more modern Orthodox element and they need their own leadership's encouragement. Nevertheless, we are all brothers and I receive enough mail in my box to know that more needs to be done.
2. Require day school and yeshiva parents to maintain a current life insurance policy and keep a copy of the updated policy in the school office as part of the tuition payment contract.
3. Don't just educate chatanim and kallot about life insurance (see RCA suggestion above). . . educate their parents. I have yet to open a series parents, children, and money, but a preview of a planned subjects includes an entry about what expenses a parent might want to pick up should their (married) adult child be unable to (or refuse). One expenses that should surely qualify is life insurance. And considering just how many families draw up contracts with the mechutanim regarding "support," it might be wise to draw up a contract with the children who are spending the support and let them know that life insurance is a top priority and a must.
Let's all put it on our to do list to review our own life insurance policies. But, please G-d, we should never have to use them.
23 comments:
While I think the importance of life insurance cannot be underestimated (and thanks for the reminder, I need to up mine), I still think that the amounts are dependent on what stage the couple is in. Yes, a family with 4 children should probably have numbers similar to those mentioned above... but a young couple with one child doesn't need that amount, and to get such a large policy may be quite costly.
A valid point. But the first dollar of life insurance is the most expensive. Each dollar costs less and less, baruch Hashem.
One more note-I think by two children, the figures are right on, at least for the husband. I'll try to write more later. Gotta run.
While it ay be true that orphans can get a break on tuition, that still means that someone pushed a bill onto the community at large. Buying a 30 year level term policy at age 25 is cheap for a non-smoker in good health. (And of course, any frum Jew knows it is assur to smoke or to fail to get sufficient exersize [v'nishmartem m'ode l'nafshoteichem and so on])
I agree that the exact amount needed depends on circumstances--how many kids, cost of living in the area, how much other capital is available....
The one recommendation that gives me pause is the one about yeshivot paying insurance for the teachers. The tax treatment for employer provided life insurance is usually unfavorable, and unless the school can get a good group rate (maybe Torah U'mesorah should look in to this) the teachers can probably get a better deal elsewhere.
By the way, one should also have long term disability insurance. This is more expensive than life, but needed anyway since you are more likely to be disabled than die young. I believe the tax treatment for employer provided disability is more favorable than for life.
sigh. this is one of the things on my mental "list" i need to take care of.
"G-d willing such a takanah will be more successful that the infamous simcha guidelines"
why do you think so?
"educate chatanim and kallot about life insurance"
this is not the only non-taharat mishpahah topic i wish our hatan/kallah teachers would have discussed with us.
how about mandating that a mesader kiddushin not perform a wedding unless they've already committed to purchasing insurance. (the way it should be with the rca pre-nupt, unless you have halakhic objections.)
Ezzie said...
While I think the importance of life insurance cannot be underestimated (and thanks for the reminder, I need to up mine), I still think that the amounts are dependent on what stage the couple is in.
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Unfortunately, life insurance is often the last thing on people's minds, and a surviving spouse can find out too late that the policy in place was insufficient because of some change(s) in the family situation.
--RWM
It is a lot cheaper to buy a level premium term policy when young and healthy than to have to worry about upping insurance each time you have a child, and at 35 when you have a large family and a longer health history. also, who remembers to up their insurance each time their situation changes?
of course insurance should be reviewed and coverage adjusted based on changing circumstances, but the suggested amounts seem like a minimum to me (other than in very few circumstances).
One thing I have done is "ladder" policies. every five years we take out an additional term policy (25 year term) for a set amount. Each newer policy costs a bit more than the the earlier policies (b/c we are older, etc.) but will last for an additional five years. The policies accumulate so coverage after is effectively doubled/tripled/etc. every five years, which should somehwat cooincide with the need for higher coverage. as the policies expire, and we are no longer renewing the oldest ones, coverage decreases, which should also coincide with lower coverage needs (no longer paying children's tuition, house paid off...).
RWM - True, though that comes back to people really needing to be up on their financial situation in general.
Another Jewish accountant - That's really smart (the "ladder" idea) and makes wonderful sense.
I would like to take point with the 1 million minimum.
I recently sat down with a life insurance salesman, and it turns out that if you want to believe (I mean believe as if it will be there when you are ready) in Social Security, there are death benfits which at least in my case cover most of my current expenses (it covers until my youngest child is about 16, at which point my wife can go to work). Put on top of that tuition, with my three children, all I need is about 600K put in an annuity at 5% and I'm covered. Yes, it's coming awfully close to the 1 Million, however there is still room for wiggling.
While life insurance is often included in a benefit package from a major corporation, you have to consider that if you leave that job, you will no longer have that coverage. So it is a good idea to have a policy that is not tied to your work and to buy it at a young age to lock in a low rate. How much you should buy really depends on many individual factors. I think that not all insurance companies would allow someone earning only $30,000 a year to buy a million$ policy b/c they use certain formulae to calculate their figures, and that includes one's income.
Large Orthodox membership organizations can look into making reduced-cost group life insurance (through a reputable carrier) available for members to buy.
Mike S-Excellent points and the point about providing day school teachers with this benefit gives me pause too for your reason and Ariella's reason. I think it is wise not to tie a policy to your job.
Ari-That is a bold suggestion! I think that the discussion of life insurance should be part of a pre-marital chatan/kallah discussion at the very least.
Another Jewish Accountant-Please contact me by email if you every want to write up your own posts. I'm glad you are a reader and commentor. Great ideas.
Moderately Insured-I'm not counting on social security to be there, but you do have a point. However, IIRC the difference in price between $600K of insurance and $1,000,0000 was rather small. As I wrote earlier, the 1st dollar is the most expensive dollar of coverage.
Ariella-You might be correct. I will need to do some research. I know income is a major factor for disability insurance. I don't know how much of a factor it plays into life insurance. If it is a major factor, there will be a number of couples limited in their purchasing as many young couples don't even have a single full income, although they have children.
Bob-Good idea.
P.S. I did some reading this weekend on recommendations by accountants and financial planners for the general public and they recommend 5 to 10 times one's full annual salary. Certainly a frum family should be looking at 10 times salary (which would put many people well above 1 mil).
I don't understand why the RCA (and everyone else) is recommending that life insurance be purchased at or before the time of marriage. It seems that the reason for life insurance is to provide for one's family, meaning primarily their children, if something should happen to them. Someone who has no children has no need for life insurance, since presumably the surviving spouse can continue working, or hopefully remarry.
As a newlywed young man once put it: why should I buy life insurance now -- so my widow's second husband gets a windfall?
We should definitely encourage everyone to buy life insurance, but the time to do so is when there is a child (or at least a child on the way). For many couples, this could be several years or longer. The premiums over this time could add up to a significant amount.
The only reason I can see to buy insurance at the time of marriage is to prevent it from slipping off the agenda altogether. Someone who is well organized and disciplined shouldn't need to.
And what about disability insurance?
As one websire puts it: Disability can be more disastrous financially than death. If you are disabled, you lose your earning power, but you still have living expenses and often huge expenses for medical care.
I heard somewhere you are several times more likely to be disabled then die.
For both of the above reasons, disability insurance is significantly more expensive then life insurance.
See also http://www.efmoody.com/insurance/disabilitystatistics.html
I'm an agent who works with a lot of young couples in the frum community. There is a shocking amount of smart, hardworking people that are uninsured or vastly under insured on both life and disability. It is so cheap compared to the risks involved and hopefully the more people understand this it will be unacceptable to go without this coverage.
I have worked with a couple of shuls to create a campaign so that everyone had adequate coverage. It doesn't have to be an agent who spearheads this kind of thing (and it may actually be more helpful if it isn't).
Also, disability insurance pricing and rating depends on the occupation of the insured - a lawyer would be cheaper then a plumber or mechanic- in addition to their health.
The other thing that everyone needs but doesn't have is an updated will if they have one at all.
TzviNoach-We waited to get life insurance until we had kids. I think it is better to establish life insurance in the begining however because it is a very unpleasant subject to bring up.
If a couple (no kids) depends on both incomes to meet expenses that would still exist if one spouse were to pass away pre-maturely, they should consider proper insurance, even if it is minimal.
HAGTBG and Insureagent-I should work on posts about wills and disability insurance too.
One other thing ... technically speaking insurance is a losers game. Everyone must put enough into the pot to cover those who do die (or get disabled) plus the overhead costs and profits of the insurance agent and company.
It can be more efficent (i.e. cheaper) to have communal support provide the funding (i.e. the traditional way), provided the community was willing to step up to the plate and people had faith that their community would come through for them. More efficent but less organized.
I guess that has not been working out in practice for the RCA to make this recommendation.
Hagtbg - it is true that it may be less expensive in the short run to try to rely on a communal approach rather than paying insurance premiums which do include the overhead and profits of the insurers. However, there are several problems with that approach. One major issue is who determines how much "coverage" one receives in the event of a catastrophe? insurance allows one to determine how much they will need in various scenarios, and the rates are established based on risks associated with the likely outcomes.....for a communal system to work, ther has to be 100% cooperation, and each participant has to feel that all other members are participating similarly. Unfortunately, we have all seen too many time those that dont appear to be pulling their fair share of the weight, which breaks down the system (even the appearance alone, not necessarily the reality).
What happens when someone who does not contribute when others have a loss, and appears to spend on things that you would not prioritize, and then that person has a loss? how much should they receive? who sets "premiums"? what if a person can not afford even the basic "premiums" because they cant make payments on their car after taking a vacation?
Insurance companies give you the ability to determine what coverage you need, and weigh the cost of the policy against the risks exist.....all without worrying weather your neighbors down the street are paying less than you but driving a nicer car, and taking better vacations!
chag sameach!
You're right, but it would be very difficult to organize and maintain and then someone leaves the community - there are a lot of variables. and term is so cheap and it's always better to have it and not need it then to need it and not have it.
This is on The Awareness Center's web page on rabbi Horowitz. He got his start molesting kids in Maryland back in the 1980's.
www.theawarenesscenter.org/horowitz_alan.html
"Alan Horowitz, 39, a Maryland psychiatrist licensed to practice in North Carolina, surrendered his N.C. license in July after pleading guilty in Maryland to ``an unlawful and unnatural, perverted sexual practice with a 12- year-old male."
Horowitz is now 60.
CALL TO ACTION:
Calling for the "Defrocking" of Rabbi Alan J. Horowitz - Convicted Sex Offender
The Awareness Center, Inc. is demanding that the Orthodox Union (OU), the Rabbinic Council of America (RCA) and Agudath Israel of America make a public statements denouncing the actions and behavior of Rabbi Alan J. Horowitz. By not doing so is condoning this serial child molesters criminal behavior.
The Awareness Center, Inc. is also demanding that rabbis around the world find a way to remove Alan Horowitz's rabbinical ordination and that of other known sexual predators (who are ordained rabbis).
At this time we are unaware how Rabbi Horowitz received his rabbinic ordination, yet it is known that it was from an orthodox source. The only way to revoke an ordination is for the rabbi who granted the title to revoke it. In some circles they see ordination as a degree that can never be taken away. According to Jewish tradition once an individual becomes a rabbi, halachicly he/she can ordain another individual.
In the past both the RCA (Rabbinical Council of America), Orthodox Union and Agudath Israel of America have stated that there is nothing they could do regarding Rabbi Horowitz since was he not a member of their organization.
Rabbi Horowitz is a convicted sex offender. Be aware that it takes a village to raise a sex offender and to enable them to continue molesting children or raping adults. Rabbi Horowitz is everyone's responsibility, including all rabbinical organizations, rabbis and Jewish communities.
It is time for all of us to stop passing the buck. Do the right thing, publicly denounce this man and remove his rabbinic ordination!
Contact Information:
Rabbinical Council of America (RCA)
Rabbi Marc Dratch - Chairman of the RCA's Task Force on Rabbinic Improprieties
Phone: 203-858-9691
info@jsafe.org
Rabbi Basil Herring, Executive Vice President
Phone: 212-807-7888 x 5
bherring@rabbis.org
_____________________________
Orthodox Union
Rabbi Hershy (Tzvi) Weinreb
execthw@ou.org
_____________________________
Agudath Israel of America
Rabbi Shmuel Bloom, Executive Vice President
Rabbi Avi Shafran,
(212) 797-9000
shafran@agudathisrael.org
Photo of Rabbi Avi Shafranhttp://www.thejewishweek.com/upload/Dra.gifThe image “http://www.ou.org/oupr/2003/rherring.jpg” cannot be displayed, because it contains errors.http://www.thejewishweek.com/upload/1WEINREB.gif
Avi Shafran /Mark Dratch /Basil Herring/Hershy Weinreb
_____________________________
Background Information
Rabbi Alan J. Horowitz, MD, is a convicted sex offender, an ordained Orthodox rabbi and an adolescent psychiatrist. He is married with one child and seven step-children.
Allegations of child abuse have followed Horowitz for decades. In Maryland, he was convicted in 1983 of performing an unnatural sexual act on the 12-year-old boy who was his patient. Allegedly, Horwitz has assaulted a string of children from California to Israel to New York in the past twenty years. Alan J. Horowitz is a rabbi, magna cum laude, M.D., Ph.D., a graduate of Duke University, and a writer for NAMBLA (North American Man/Boy Love Association) publications.
In 1990 and 1991, Horowitz was charged with sexually abusing two boys under the age of 11, a boy less than 14 years old and a girl under the age of 17. On July 27, 1992, Horowitz pled guilty to sodomizing a nine-year-old psychiatric patient as part of a plea agreement. The charge was but one of the 41 pending sex-related charges involving multiple children that had been pending against him. Horowitz was sentenced to ten to twenty years in prison.
Rabbi Horowitz was released on conditional parole November 1, 2004 from Oneida Prison, NY. According to the New York Sex Offender Registry he was Designation: Sexually Violent Offender and Predicate Sex Offender level three sex offender). It is listed that his victims ranged in age from age 8 to 14.
On May 22, 2007 Rabbi Alan Horowitz was caught in India leaving a trail of new child victims. Horwoitz was in violation of his parole since June, 2006. He will be extradited back to the US.
Can I add a request that people should invest in a homeowners or renters policy as well. I saw a blog post the other day about a family who lost everything they owned in a fire, and needed help. Please spend a few dollars (pounds, shekels etc) and get yourself a policy. IF its every your family that gets burned out at least you won't have to worry about replacing your stuff.
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