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Tuesday, May 24, 2011

Time to Revisit Areivim

A reader sent me an email that went out from Daily Halacha and I once again feel the need to revisit Arevim and send out the message in hopes that someone will hear it and bring it to those that endorse the program to hear: buy real life insurance and actually take care of your family.

I wish I had the brains to take a photo of the original Areivim pages, a they change from time to time. The last time I visited the subject (Nov 2010) I recall visiting each webpage and that each site made a disclaimer of sorts that the program is not life insurance. The website (Areivim USA) the following email refers to specifically states "Areivim is a 100% non-profit, member-financed, insurance program." I hope I am not mistaken re: this particular website, but I believe that in the past, the different programs had a tad bit of honesty to say somewhere that this was a tzedakah program.

Not to get sidetracked, my message remains the same: don't buy snake oil. Buy old fashioned life insurance (Term 80 is a good standard, relatively inexpensive insurance program. Regular life insurance is NOT controlled by a Rabbinic Board. Regular life insurance is regulated and there are reserve funds. Regular life insurance distributes funds upon death, not upon the marriage of a chatan or kallah. Regular life insurance does not consider your other assets. When you receive a regular life insurance payment, you can use the money as you deem appropriate. Here, Areivim states:


  1. A fund of $100,000 will be established by Areivim for each unmarried child and the spouse in the bereaved family.
  2. The funds are placed into escrow accounts where they are saved until the child's wedding. Any accrued interest collected until then may be used to provide for the orphans' and/or spouses material and educational needs. All decisions in these matters will be made under the authority of the rabbinical committee.
  3. Areivim has been established primarily as charitable (Tzedakah) endeavor. In the event that an orphan has shown the capability of supporting themselves financially and paying for their own marriage expenses, or in the event of a substantial inheritance, no funds will be collected. In certain cases, a partial fund will be established to complete the sum of $100,000 per child.
  4. In the event of (G-d forbid) a large number of deaths among members (as a result of war, earthquake, etc.), Areivim reserves the right to consult with its Rabbinical committee in regards to proper procedures.
  5. In all cases of dispute between members and Areivim's administrators, Areivim's rabbinical committee will serve as arbitrators and their decisions will be accepted as final.
  6. Members relinquish all rights to sue or submit legal claims against the decisions of Areivim or its Rabbinical committee.
The following is the letter that went out. I've deleted the name of the beneficiary family. Rabbi Mansour, please reconsider your endorsement and encourage families to do the right thing and buy regular life insurance. You have an opportunity to encourage people to invest in something real. Please do. This is not a protection, nor is it a nest egg as stated in the audio file which I don't know how to put in this email yet. At best, this is a hachnasat kallah fund for orphans with no guarantees.

Subject: Request from Rabbi Mansour- Join Areivim!


Dear friends;

We appeal to you today, not for money for an organization, but for
financial stability for your own children. Areivim is a non-profit
community based benefit program that does not have a premium, but pays out
to orphans and widows when the wage earner of the home suffers an untimely
passing. This program is very successful in Israel, and all the Rabbis of
our Community including Rabbi Eli Mansour, support, encourage, and REQUEST
your participation. (Please listen to Rabbi Mansour's appeal in the
attached audio file.)

Here is how it works:
. Join your family at no cost, and no monthly or annual premium. Your
family is now covered in the Areivim group.
. Upon an untimely passing, each unmarried orphan and widow receives
$100,000.00, or a lower pro-rated amount if the threshold of 14,286
families are not joined in the group.
. You pay $7.00 per unmarried orphan and widow when there is an
unfortunate untimely passing in the group. The $7.00 will be reduced once
the membership exceeds 14,286 families. (Currently, enrollment is at
10,800.)

The passing recently of Rabbi [deleted] zt"l was a terrible tragedy.
We can't ignore the thought that comes to mind of his family's financial
stress had he not assured himself and his family for the unknown with
Areivim. B"H, he had fulfilled his duty towards his family and enrolled in
the program from which his family will now benefit immensely.

Even if you already have Life Insurance, we encourage you to participate in
this program for the sake of your family, and to help support your
community's wellbeing.

Be responsible. Head the call. Join today. Call Arevim at 877-827-3484 or
visit www.areivimusa.org.


13 comments:

JS said...

Can't believe this is still being bandied around.

I love these two lines:
"In all cases of dispute between members and Areivim's administrators, Areivim's rabbinical committee will serve as arbitrators and their decisions will be accepted as final."

and

"Members relinquish all rights to sue or submit legal claims against the decisions of Areivim or its Rabbinical committee."

Geez. Can you be any more self-serving? If you disagree with Areivim's administrators, then Areivim's Rabbinical counsel will arbitrate. If you disagree with the Rabbinical counsel, you can't sue them. I'm pretty sure this would be considered void as unconscionable. But, hey, don't want to sue in secular courts and be a moseir.

I also like how if an orphan becomes financially self-supporting they forfeit their right to the $100k (assuming the account even exists). Way to disincentivize people from being self-sufficient.

This is just more of the same segulah nonsense and other con jobs in the name of religion. Anyone with half a brain in their head will get life insurance. The cost of insuring a young, healthy person is minimal and I can't understand why communal efforts are being directed to this nonsense as opposed to real solutions.

If you want a communal solution what should be done is something like the following: Your shul membership includes surcharge of a few hundred dollars. The shul gets a group rate on policies for all its members. Someone dies, there's a payout to the family and the community doesn't have to support yet another widow/widower and orphans.

Anonymous said...

If this came from a source that did not purport to be a Jewish organization, people would be decrying it as an outright scam. I think it's time to accept the possibility that is actual fraud, not just a misguided religious non-profit.

old frum actuary said...

I have spent hours on this topic, reading investigating, sending emails, guest posting on this blog and meeting the guys who run the program. They came to my house to talk to me since they wanted my Rosh Yeshiva to sign and he said he wouldn't until I approved. (He knows a lot more about a lot of things than I do, but admitted that my actuarial skills are better than his :) They threw out nonsensical numbers about how many members and how many deaths and lots of other junk; then the kicker: they collect the money NOW but don't distribute it until LATER, if they so choose. Therefore, against my initial reaction of "well-intentioned idiots" I came to the reluctant conclusion that someone (or many someones) are making money off of this and it is fraud. However, I am willing to be proven wrong and go back to my original assumption that the guys who run this are well intentioned idiots. In either case, stay away.

With regard to Rabbi {deleted} ztl, how many kids did he have? i.e., how much did this "free' program cost the members just due to this one death?

Conservative scifi said...

Since a healthy 35 year old can get a 20 year term $500,000 policy for as little as $300 a year (and my policy as an older nonsmoking overweight person with an average family history costs only about $600 a year), this is clearly a scam. If you are a favored member of the "Areivim Rabbinical Council", I'm sure you'll receive some benefits. Otherwise, expect to receive nothing.

If the average death rate of the US occurs at 8.2/1000, and there are 15,000 members, and each member has a spouse and 3 children (small families by haredi standards), and you have to pay $7 per family member, then you'd expect to have 123 deaths, leaving 492 dependents. That would result in more than the maximum $28 per month in order to support all of these dependents. Even if the lower death rate of Israel of 5.5/1000 is used, you'd still have 330 dependents each year (27.5 per month), which is way more than could be supported by $28 per month.

Zach Kessin said...

I think someone needs to report these guys to the state insurance regulators. This looks and acts in every way like an affinity fraud scheme, at least from where I sit.

Miami Al said...

Here is the thing, if you took out the pay for wedding/at the discretion of the Rabbinic Counsel part, this would feel less like an affinity scam and more like a reasonable organized tzedakah plan.

Not in place of insurance for your family, but as simply a way to help the poor, widow, and orphan... you know, the actual tzedakah listed in Torah, as opposed to the education of the son of the Doctor, the Lawyer, and the Banker, as urged by contemporary poskim.

old frum actuary said...

To Maimi Al: As a tzedakah org I think the idea is great. "Sign up and when someone dies leaving a widow and small children we will hit your credit card with $25. Whatever we collect we distribute. The End." No more letters in the mail, no more full page ads in the jewish papers, etc.

And if someone trustworthy (e.g., Yad Eliezer) starts such an organization, I would sign up. But this? No thanks.

Miami Al said...

Old Frum Actuary:

Right. As a transparent charity, sounds good. I might go a step further, ask people to commit to $25 or $50/month, whichever they can afford, and it hits their card monthly. The money is kept in an endowment, and money is then provided to the widow or orphans.

I mean, we're busy redoing our insurance needs and it's WAY MORE than $100k/person. I wouldn't be interested in this as a benefit for my family. But as a way of organizing communal support, sounds great.

Can we combine this with a community pledge to NOT support door-to-door shnorrers from overseas, then I'm 100% in.

But I think these charities (as charities, not affinity scams) are what we actually need more of, simple community efforts to raise medium to large sums community wide to support charitable needs in the community. This would be much better, and more comfortable, than the constant begging/appeals going on.

Miami Al said...

And in terms of Torah values, this is a MUCH better Tzedakah cause than paying able bodied men to not work.

Sid Dagore said...

Old Frum Actuary

Want to collaborate on a model to find what the realistic charge per month should be/back out the factor of a mort. table that they are assuming just to show how ridiculous it is?

Its gonna be highly dependent on the rate of birth of kids/rate of marrying off kids, which I don't have data for.

Also, why not call the regulator and tell them? Mimanafshach - it its illegal its a service to the public to shut them down, and if it is legal, then I'm gonna start my own "charity" and have a beautiful arbitrage opportunity on the risk capital.
`
Young frum student actuary

old frum actuary said...

I tried talking to them about their data - how OLD are the people signing up and how many kids? I was thinking folks in their 30s and 40s and assuming an averge of 6 kids (RW orthos). But one of the guys at my table (probably thinking this was going to HELP his case) told me he was a member and he was 50 and STILL had 9 unmarried kids at home. The other guy said he was a bit younger but had 10!

It should be easy to see that with 14,286 members paying the max of $28 a month, the maximum number of kids they can collect for in a year is 48. With an average of 6-8 kids per family that means 6-8 deaths from 14,000+ people. One death per 1800-2400 people is way below any table you are going to use (except maybe those who actually undergo underwriting)

Bottom line is they had NO DATA on their pool with regard to anything; so the conversation sort of petered out.

I think they took me off their mailing list since I have not received any flyers from them since that meeting. :)

Good luck on your exams, Sid!

Yigal Doron said...

I hear that England are joining our branch is that true? how does that work why are we paing for them?

The Chad said...

UK frum student actuary said...

Hi Old frum actuary, Sid.

I would love to discuss this with you offline. I am a (not so young) student actuary in the UK and an Areivim programme has just started here. I think it might be joined to yours asYigal mentioned, but am not sure.

I have also run some simple numbers and can't seem to reconcile the payouts.

You can reach me on tryme2 at gmail dot com.

Thanks