Two weeks ago I got work that management of Kol Yisrael Areivim was going to appear on the Zev Brenner Talkline program to "clear up the misinformation and rumors spread on the Internet." Being that I hosted the second blog post regarding Areivim that I know of I tuned in last motzei Shabbat. The planned program was postponed because of "new" and "exciting" breaking developments. Tonight (motzei Shabbat, June 13, 2010) I once again tuned in and again the program was postponed, this time because the organization was putting together their documentation, instead I'm listening to an extended and heated Q and A with a frum lawyer about why ponzi schemes seems to hit the frum community hard. How timely!
There are a lot of defenders of the KYA program and the second postponement by KYA should raise some really huge red flags for those who still believe this program could work. This organization didn't develop yesterday. KYA was formed in 2005 (5 years ago). In February of 2007 (3 + years ago), Jonathan Rosenbloom posted an editorial "Look Before You Leap" at Cross-Currents. In his editorial, he pointed out a number of concerns with the program calling it too good to be true. But he nevertheless endorsed the tzedakah aspect of the program calling it an "improvement" over the current situation. For the most part, commentators including seasoned actuaries, chimed in decrying this program.
Now we are in 2010 and following the guest post I hosted, the second such post that I know, Rabbi Horowitz took up a conversation with KYA management, the 3rd post dealing with this organization that claimed in their response to Rabbi Horowitz that the organization has been checked out and endorsed by actuaries, CPAs, and lawyers, to say nothing of Rabbis and community officials. Following this post, KYA pulled the endorsements of the Agudah, NCYI, and an official from the OU were pulled from the website.
Rabbi Horowitz's first post of a handful went up on May 17, 2010. Nearly one month later after that post and 5 years after the founding and marketing of the organization through numerous print and Internet advertisements, the organization is unprepared to go on Talkline defend their program and "clear up the misinformation". Either the research has been done or it hasn't been done! I've written audit reports. In fact, I have an entire stack of such reports sitting in my home office. With a quick review of any of my reports I would be half prepared to talk about work I did a decade ago. My papers have been used by auditors who came after me and they have been examined by outside lawyers and auditors. Such is how a professional office is run. It is truly astounding that for for 5 years KYA and others (Areivim and Areivim USA) have been able to advertise and collect funds without making nary a blip on the radar. Now that they have been put on the radar, they have been unable to go on the air and talk and take questions for no more than 2 measly hours, much of which is interrupted by commercials and buffered by the back and forth with Mr. Brenner. This is just downright terrifying!
Think of how much money has been poured into this program that could have been used to start up a tzedakah to help families fill in the gap to buy REAL life insurance, i.e. the type that pays upon death with no strings attached and allows a family freedom to use the proceeds as they see fit (rather than throwing some interest income their way until the time when a child might qualify to use the lump sum to get married!). Think of all of the people who have bought into this program, passing up opportunities to buy REAL Life Insurance at more affordable prices. Think about the families that could have bought REAL Life Insurance 5 years ago but are now no longer able to do so because they have been hit by the unthinkable.
So will KYA make a showing on Talkline next motzei Shabbat? I really hope so and I hope that readers will take an interest and pepper management with questions and educated commentary. It really shouldn't take this much time to get your docs together KYA. You've been around since 2005. Your docs should have been in hand then!
Showing posts sorted by relevance for query KYA. Sort by date Show all posts
Showing posts sorted by relevance for query KYA. Sort by date Show all posts
Sunday, June 13, 2010
Friday, May 28, 2010
Surprised to Find Orthonomics in the Yated
I was very pleasantly surprised to see that my Guest Poster's featured post AREIVIM and Why I Don't Like It was quoted in full in the Reader's Write section of this week's Yated. There was no mention that the content of the letter came from my blog, and I'm certain that is for the better. Since I was pleasantly surprised to see the Guest Post in the Yated, I'm curious as to how it landed in the Reader's Write section. The letter begins like this and is followed by the text of the Guest Post:
In response to Rabbi Binyomin Ginsburg’s column on the importance of buying life insurance
and the coincidental inclusion of a brochure for Areivim in the same issue of the Yated, I would like to share some thoughts written by an actuary, whose job is to analyze risk in insurance, among other things. His remarks are titled, “Areivim and Why I Don’t Like It.” He writes as follows:
I had no idea that in the same edition that Rabbi Ginsburg stressed the importance of life insurance that Areivim included a brochure in the paper copy of the newspaper. Simply wow. Now that the KYA/Areivim/Areivim USA issues have come to the forefront of print and virtual media, I am hopeful that we can finally discuss efficient use of resources, personal finance, and transparency head on.
Meanwhile Rabbi Horowitz has published his recommendation that contributors and members of KYA/Areivim/Areivim USA dissolve their relationship with the organization and he is taking some heat on his webpage and at VIN.
Speaking of transparency, in perhaps the most idiotic comment of the year, a VIN reader correlated Rabbi Horowitz's questioning of Areivim to questioning Moshe Rabbeinu writing: "Doson Veavirom also doubted the credibility of Moshe Rabeinu!" Need little ol' me have to review some basic pashat Torah for the benefit of VIN readers?! Moshe Rabbeinu is an example of the great transparency that one should demonstrate when dealing with communal funds. There was no need to place blind trust in Moshe Rabbainu because he avoided suspicion by keeping a transparent accounting and open pockets. In fact, when collecting funds for the Mishkan Moshe Rabbeinu even told the people when enough was collected. Can you imagine a shul, school, or organization today shutting down their collections mid-year because they have what they need?
Just because a tzedakah manages to put out glossy brochure after glossy brochure does not make it "Moshe Rabbeinu." I don't nitpick every action of the organizations that we donate too. In fact, if I was in charge I might spend money differently. But so long as the organization is reasonably forthcoming and demonstrates basic competency and integrity, I am pleased to be a donor. KYA has not been at all forthcoming and has even lied about endorsements and Board Members. Am Yisrael can and will take care of widows and orphans and I believe we will be able to do so in a more dignified fashion without a middle man such as this.
In response to Rabbi Binyomin Ginsburg’s column on the importance of buying life insurance
and the coincidental inclusion of a brochure for Areivim in the same issue of the Yated, I would like to share some thoughts written by an actuary, whose job is to analyze risk in insurance, among other things. His remarks are titled, “Areivim and Why I Don’t Like It.” He writes as follows:
I had no idea that in the same edition that Rabbi Ginsburg stressed the importance of life insurance that Areivim included a brochure in the paper copy of the newspaper. Simply wow. Now that the KYA/Areivim/Areivim USA issues have come to the forefront of print and virtual media, I am hopeful that we can finally discuss efficient use of resources, personal finance, and transparency head on.
Meanwhile Rabbi Horowitz has published his recommendation that contributors and members of KYA/Areivim/Areivim USA dissolve their relationship with the organization and he is taking some heat on his webpage and at VIN.
Speaking of transparency, in perhaps the most idiotic comment of the year, a VIN reader correlated Rabbi Horowitz's questioning of Areivim to questioning Moshe Rabbeinu writing: "Doson Veavirom also doubted the credibility of Moshe Rabeinu!" Need little ol' me have to review some basic pashat Torah for the benefit of VIN readers?! Moshe Rabbeinu is an example of the great transparency that one should demonstrate when dealing with communal funds. There was no need to place blind trust in Moshe Rabbainu because he avoided suspicion by keeping a transparent accounting and open pockets. In fact, when collecting funds for the Mishkan Moshe Rabbeinu even told the people when enough was collected. Can you imagine a shul, school, or organization today shutting down their collections mid-year because they have what they need?
Just because a tzedakah manages to put out glossy brochure after glossy brochure does not make it "Moshe Rabbeinu." I don't nitpick every action of the organizations that we donate too. In fact, if I was in charge I might spend money differently. But so long as the organization is reasonably forthcoming and demonstrates basic competency and integrity, I am pleased to be a donor. KYA has not been at all forthcoming and has even lied about endorsements and Board Members. Am Yisrael can and will take care of widows and orphans and I believe we will be able to do so in a more dignified fashion without a middle man such as this.
Monday, May 17, 2010
Areivim: Friends Don't Let Friends Purchase Snake Oil
Since the start of my blog, I have commented on the uses of tzedakah money and the advertising techniques. I have always stayed away from naming names as I operate my blog on the premise that it is a forum for intelligent people to discuss ideas, trends, and culture, not specific people, shuls, and schools. Until last week, I had never come out and named an organization by name (I once linked to the website of said organization with a small warning again co-mingling cash in gemachs and buying into programs that aren't fiscally sound).
Last week, I broke with my usual protocol when a very kind and, most importantly, qualified reader volunteered a Guest Post: AREIVIM and Why I Don’t Like It. I feel so strongly about the issue of not only having life insurance, but educating co-religionists regarding its importance and helping needy families purchase life insurance (rather than multi-thousand dollars apparel, wigs, furniture sets, and pricy sheva berachot for chatanim and kallot that have never paid an electric bill of their own), that I'm willing to go out on a limb here and name names. . . . .or shall I say, lack of names!
Rabbi Horowitz composed a letter to the one and only public name behind Areivim, Yoel Bochner. He asked a series of basic questions about the plan, and he received an answer the essentially reads like this: Trust Us. We are endorsed by Askanim and Rabbonim.
I felt perfectly comfortable publishing the guest post without contacting the organization because I am of the believe that anyone selling a financial product should have officers, audited financial statements, and a prospectus. The Areivim website doesn't list contacts and has the chutzpah to ask you to provide your contact information to them in order that they be able to contact you!
After Rabbi Horowitz received answers to direct questions posed to Avreivim, I believe that I have all the evidence I need to say: Friends Don't Let Friends Purchase Snake Oil. Whoever is behind this program (and we still haven't the foggiest idea, although the other Areivim website lists this as a project of Kupat HaIr) doesn't have the common courtesy to release their names (not in the letter to Rabbi Horowitz and not through their website) or post the names of those who are qualified to endorse such a plan (namely a team of actuaries, which Mr. Bochner claims are out there. . . . .now who are they?!?!?!?). Meanwhile, they are running a very slick advertising campaign through the internet, mailings, and local publications and I think that anyone who has turned their credit card number over should think twice and encourage
The lack of transparent finances and legalities is, of prime importance, but I want to point to three other areas of significant concern (I will underline in the reproduced letter below):
1. Mr. Bochner takes the time in his letter to essentially educate against life insurance, rather than use a valuable platform to educate about the importance of life insurance (although he does ask people buy life insurance). The main premise behind the study of economics is the concept of scarcity of resources. Rather than encouraging families to prioritize resources and mobilizing the community to prioritize our resources in helping needy families purchase real life insurance, he promotes his own program's affordability and essentially discourages the purchase of commercial insurance.
2. The organization reserves the right to decide you don't actually need the insurance and responsible people who purchase life insurance will not be eligible for payout from Areivim despite membership. This achieves the exact opposite of creating a situation of dignity, and will also practically ensure that only the most uninsurable folks buy into this plan.
3. The organization encourages widows to spend the money the "big expenses" of tuition and weddings, but allows a Rav to be the arbiter. The idea that a widow(er) should need to answer to a Rav regarding the money they rightfully receive from a "life insurance" plan (no matter how flawed) strikes me as CRUEL.
I am shaking as I write this and I will go so far as to say that the organization that I believe is behind this plan already deals with millions of dollars of tzedakah funds yearly and I think it high time that transparency be demanded. Additionally, it is time to start asking our community leaders to stop re-inventing the wheel and encourage a philosophy of sechel where precious communal money is at stake. This plan makes about as much sense as investing our life savings in becoming Amway salesperson. What news will we wake up to next, that we need a frummer version of penicillin? It is time to check the ego at the door and admit that we might be a brainy people, but Met Life and Northwestern Mutual have know-how.
In the meantime (I have to go to work), can my more connected readers who might get the time of day please contact endorsers and ask them to take a second look. Breaking news: The endorsements from a Rabbi at the OU, the Agudah, and the National Council of Young Israel are no longer appearing on the website. Can someone find out if they pulled their endorsement. And if so, encourage publication of such. OK, I have to run to work. Here is the letter:
MR. YOEL BOCHNER’S RESPONSE
Dear Rabbi Horowitz,
We are grateful for your interest and the insightful points you raise, and appreciate the opportunity to respond and dispel some of the misconceptions and confusion surrounding our work.
Your reputation as someone who works tirelessly for progress and change in our community, refusing to accept 'because that's the way it always done' as a reason for stagnation, makes us confident that, if you take the time to study our plan, you will share our vision.
In addition, your touching personal note about your own childhood underscores the importance of what we're doing: sparing other humiliation and inconvenience
It would be cynical and unfair to assume that KYA is 'just another' activist organization when, in a sense, we have entirely rewritten the way things are done.
Not content with mere figurehead rabbinic figures, the rabbanim affiliated with us are involved, investing time, energy and heart in this project, one which has become a priority to them.
The rabbanim in question are representative of all the various streams within yahadus hacharedis, chassidim, litvishe, Sephardim and Ashkenazim.
Please note that the rabbanim to not 'endorse' us, or promise to daven for people who help us- they are us! Every single rov is already a part of- or will be a part of- our work and they are the prime catalysts for our success.
In America, the names of Rav Mechel Steinmetz and Rav Benzion Strasser on signed on to the account, and we have hundreds of other rabbanim in communities across America.
You see, Rabbi Horowitz, the rabbanim are our greatest allies because they know better than anyone else just how broken the old system was, and how workable this one is.
They are the ones that were faced with the bitter daily task of hearing the tales of pain from new almanos, the accounts of orphans in a home bereft of a breadwinner.
There was a time before people grew numb, when it was still possible to appeal to the masses and hope to touch their hearts; unfortunately, as tragedy followed tragedy, people- even in a nation of rachmanim- grew a little less sensitive to the relentless onslaught of tzaros.
The 'keren' system, in which the rabbanim formed special accounts for each needy family, was no longer an effective way to galvanize the people and raise the necessary amounts of money.
Rabbi Horowitz, you- correctly- mention the humiliation of the young orphans that are fully aware of their new status as 'wards of state'.
Imagine the shame of young children who are forced to 'pose' for the pictures that will be emblazoned on the walls and shuls of their hometown? Is there anywhere to run from such pain?
We came into being due to original and creative thinking by the rabbanim and askanim involved in these wrenching situations. You, Rabbi Horowitz, raise valid points about how it ought to have been done, in an ideal world, but these dedicated individuals are working within the parameters of reality, well aware of the limitations of people.
You know the numbers- each head of family commits themselves to three dollars per orphan, in the sad scenario of a parent's death.
Three dollars per member – based on a group of 16,500 people in the group- per yassom equals fifty thousand dollars per child.
A lot of rules and regulations were put in place to assure that the system can work out.
The idea gathered steam, and in America- where, unfortunately, tragedy is no stranger- askanim wanted a similar program. The 'keren' system stopped working here as well, and the embarrassing newspaper campaigns, even those that attempt to maintain the anonymity of the recipient, often cause great collateral damage.
The lay leaders that created the American model felt that fifty thousand dollars per child was insufficient for this country, and changed the numbers- six dollars per child would equal one hundred thousand dollars per child. We were welcomed by the heads of virtually every single communal organization- Agudas Yisroel, Young Israel, Orthodox Union, Chabad and various other communities.
The terms and condition were drafted by a team of accountants and actuaries, working pro bono for a cause that was placed at the forefront of the communal agenda by rabbanim.
Rabbi Horowitz, before we delineate the details, allow us to respond to your overriding concern; why not get people to purchase conventional life insurance?
The question is a good one. Kol Yisroel Areivim is not an insurance policy and we encourage every person who can purchase a standard policy to do so. The more they invest, the more their families stand to receive in the event of tragedy, c'v.
Now, for the numbers. In order for a life insurance policy to really make a difference, it would need to provide a minimum $250,000.00 per child. This is based upon the need for $15,000.00 per year per child.
The maximum return on money, with no risk, is 2.5 per year, which means that the profit on $250,000.00 is $6,250.00 per year. The remainder of the money per child would need to come off the 'keren' for each of the ten years, and thus the 2.5 percent yield will decrease proportionately as well.
This option is an expensive one, and a great many frum families cannot afford the monthly payments in a budget weighed down by mortgage, food, tuition and car payments. Bear in mind that this type of policy is only for ten years and one would need to purchase it at a young age in order to get such a favorable rate.
As the age of a breadwinner increases, and health concerns arise, the price rises as well, and often those who need it most cannot afford it. In addition, so often the payout of several hundred thousand dollars is not nearly enough and then the families must resort to the benevolence of the community regardless.
As mentioned, Kol Yisroel Areivim fills a void not in theory- where everyone should have life insurance- but in practice, where many people do not. In fact, even if the deceased did have life insurance, but with a plan that gives less than one hundred thousand dollars per child, Kol Yisroel Areivim fills the gap.
The rabbanim and lay leaders at our head have drafted regulations that ensure that no individual has excessive power and to maintain accountability and fairness.
• The KYA Policy is open to all members of Klal Yisroel.
• All policies will be reviewed by a board of rabbanim and policy acceptance is contingent upon their approval.
• The rov of the shul where the deceased was a member, of a rov closely associated with the family, will oversee the transfer of funds and ensure that the needs of each individual child are met.
• The account is opened in the name of the surviving parents and the family rov, as well as a family guardian to ensure that the money is used or invested wisely.
• Kol Yisroel Areivim reserves the right to have applicants fill out a medical questionnaire that will determine eligibility. In the event that the questionnaire was filled out incorrectly, KYA reserves the right to terminate the agreement. Funds that were paid out must be refunded.
• Any issues that arise will be dealt with by the rabbinical board of KYA or its authorized arbitrator. Their decisions will be final.
• In the event of a member’s passing, the agreed-upon fees will be collected from the group's members. The funds will then be used to establish a trust for the children of the deceased. In the event that the group is complete ,with 16,500 members, the amount will be one hundred thousand dollars per child. If the group is incomplete, there will be a minimum payment of fifty thousand dollars per child
• The amount collected is $6.00 per orphan, with a maximum total of $288.00 per year.
• If the charge does not go through for a period of ninety days, membership will be terminated.
• The money should ideally be allocated for major expenses, such as tuition or marriage, but the rov assigned to the family will be the ultimate arbiter.
• Since this fund is meant as an opportunity give tzedaka, in a respectful fashion, to almanos and yesomim, no fund will be established for people that have life insurance in place, or a sufficient sum in cash/assets to render them ineligible of receiving communal assistance.
• Within the organization there is no single individual that has excessive control over the money.
• The office is run by five askanim that do the office and technical work,and each individual case is assigned one overseer from the central office. These people are efficient and knowledgeable and available to discuss any case or answer questions.
Obviously, there are others that wish to copy the success of our model, and it would serve the best interests of the klal if we could unite and join forces. For various reasons, this is not the case, however.
Our appeals are never based upon the drama of painting heartbreaking scenarios and thus using fear and guilt to convince the people. We much prefer to share the facts in an intelligent, clear fashion and respect the ability of people to make intelligent decisions.
Rabbi Horowitz, we are most grateful for your interest and for taking the time to study our plan and its benefits. Your willingness to ask hard questions is testimony to your concern for Klal Yisroel, and thus, it makes you a most fitting partner for our work. It is gratifying that there are people such as yourself that are realistic enough to recognize the potential problems, yet still hopeful enough to encourage positive change.
Respectfully,
Yoel Bochner
Last week, I broke with my usual protocol when a very kind and, most importantly, qualified reader volunteered a Guest Post: AREIVIM and Why I Don’t Like It. I feel so strongly about the issue of not only having life insurance, but educating co-religionists regarding its importance and helping needy families purchase life insurance (rather than multi-thousand dollars apparel, wigs, furniture sets, and pricy sheva berachot for chatanim and kallot that have never paid an electric bill of their own), that I'm willing to go out on a limb here and name names. . . . .or shall I say, lack of names!
Rabbi Horowitz composed a letter to the one and only public name behind Areivim, Yoel Bochner. He asked a series of basic questions about the plan, and he received an answer the essentially reads like this: Trust Us. We are endorsed by Askanim and Rabbonim.
I felt perfectly comfortable publishing the guest post without contacting the organization because I am of the believe that anyone selling a financial product should have officers, audited financial statements, and a prospectus. The Areivim website doesn't list contacts and has the chutzpah to ask you to provide your contact information to them in order that they be able to contact you!
After Rabbi Horowitz received answers to direct questions posed to Avreivim, I believe that I have all the evidence I need to say: Friends Don't Let Friends Purchase Snake Oil. Whoever is behind this program (and we still haven't the foggiest idea, although the other Areivim website lists this as a project of Kupat HaIr) doesn't have the common courtesy to release their names (not in the letter to Rabbi Horowitz and not through their website) or post the names of those who are qualified to endorse such a plan (namely a team of actuaries, which Mr. Bochner claims are out there. . . . .now who are they?!?!?!?). Meanwhile, they are running a very slick advertising campaign through the internet, mailings, and local publications and I think that anyone who has turned their credit card number over should think twice and encourage
The lack of transparent finances and legalities is, of prime importance, but I want to point to three other areas of significant concern (I will underline in the reproduced letter below):
1. Mr. Bochner takes the time in his letter to essentially educate against life insurance, rather than use a valuable platform to educate about the importance of life insurance (although he does ask people buy life insurance). The main premise behind the study of economics is the concept of scarcity of resources. Rather than encouraging families to prioritize resources and mobilizing the community to prioritize our resources in helping needy families purchase real life insurance, he promotes his own program's affordability and essentially discourages the purchase of commercial insurance.
2. The organization reserves the right to decide you don't actually need the insurance and responsible people who purchase life insurance will not be eligible for payout from Areivim despite membership. This achieves the exact opposite of creating a situation of dignity, and will also practically ensure that only the most uninsurable folks buy into this plan.
3. The organization encourages widows to spend the money the "big expenses" of tuition and weddings, but allows a Rav to be the arbiter. The idea that a widow(er) should need to answer to a Rav regarding the money they rightfully receive from a "life insurance" plan (no matter how flawed) strikes me as CRUEL.
I am shaking as I write this and I will go so far as to say that the organization that I believe is behind this plan already deals with millions of dollars of tzedakah funds yearly and I think it high time that transparency be demanded. Additionally, it is time to start asking our community leaders to stop re-inventing the wheel and encourage a philosophy of sechel where precious communal money is at stake. This plan makes about as much sense as investing our life savings in becoming Amway salesperson. What news will we wake up to next, that we need a frummer version of penicillin? It is time to check the ego at the door and admit that we might be a brainy people, but Met Life and Northwestern Mutual have know-how.
In the meantime (I have to go to work), can my more connected readers who might get the time of day please contact endorsers and ask them to take a second look. Breaking news: The endorsements from a Rabbi at the OU, the Agudah, and the National Council of Young Israel are no longer appearing on the website. Can someone find out if they pulled their endorsement. And if so, encourage publication of such. OK, I have to run to work. Here is the letter:
MR. YOEL BOCHNER’S RESPONSE
Dear Rabbi Horowitz,
We are grateful for your interest and the insightful points you raise, and appreciate the opportunity to respond and dispel some of the misconceptions and confusion surrounding our work.
Your reputation as someone who works tirelessly for progress and change in our community, refusing to accept 'because that's the way it always done' as a reason for stagnation, makes us confident that, if you take the time to study our plan, you will share our vision.
In addition, your touching personal note about your own childhood underscores the importance of what we're doing: sparing other humiliation and inconvenience
It would be cynical and unfair to assume that KYA is 'just another' activist organization when, in a sense, we have entirely rewritten the way things are done.
Not content with mere figurehead rabbinic figures, the rabbanim affiliated with us are involved, investing time, energy and heart in this project, one which has become a priority to them.
The rabbanim in question are representative of all the various streams within yahadus hacharedis, chassidim, litvishe, Sephardim and Ashkenazim.
Please note that the rabbanim to not 'endorse' us, or promise to daven for people who help us- they are us! Every single rov is already a part of- or will be a part of- our work and they are the prime catalysts for our success.
In America, the names of Rav Mechel Steinmetz and Rav Benzion Strasser on signed on to the account, and we have hundreds of other rabbanim in communities across America.
You see, Rabbi Horowitz, the rabbanim are our greatest allies because they know better than anyone else just how broken the old system was, and how workable this one is.
They are the ones that were faced with the bitter daily task of hearing the tales of pain from new almanos, the accounts of orphans in a home bereft of a breadwinner.
There was a time before people grew numb, when it was still possible to appeal to the masses and hope to touch their hearts; unfortunately, as tragedy followed tragedy, people- even in a nation of rachmanim- grew a little less sensitive to the relentless onslaught of tzaros.
The 'keren' system, in which the rabbanim formed special accounts for each needy family, was no longer an effective way to galvanize the people and raise the necessary amounts of money.
Rabbi Horowitz, you- correctly- mention the humiliation of the young orphans that are fully aware of their new status as 'wards of state'.
Imagine the shame of young children who are forced to 'pose' for the pictures that will be emblazoned on the walls and shuls of their hometown? Is there anywhere to run from such pain?
We came into being due to original and creative thinking by the rabbanim and askanim involved in these wrenching situations. You, Rabbi Horowitz, raise valid points about how it ought to have been done, in an ideal world, but these dedicated individuals are working within the parameters of reality, well aware of the limitations of people.
You know the numbers- each head of family commits themselves to three dollars per orphan, in the sad scenario of a parent's death.
Three dollars per member – based on a group of 16,500 people in the group- per yassom equals fifty thousand dollars per child.
A lot of rules and regulations were put in place to assure that the system can work out.
The idea gathered steam, and in America- where, unfortunately, tragedy is no stranger- askanim wanted a similar program. The 'keren' system stopped working here as well, and the embarrassing newspaper campaigns, even those that attempt to maintain the anonymity of the recipient, often cause great collateral damage.
The lay leaders that created the American model felt that fifty thousand dollars per child was insufficient for this country, and changed the numbers- six dollars per child would equal one hundred thousand dollars per child. We were welcomed by the heads of virtually every single communal organization- Agudas Yisroel, Young Israel, Orthodox Union, Chabad and various other communities.
The terms and condition were drafted by a team of accountants and actuaries, working pro bono for a cause that was placed at the forefront of the communal agenda by rabbanim.
Rabbi Horowitz, before we delineate the details, allow us to respond to your overriding concern; why not get people to purchase conventional life insurance?
The question is a good one. Kol Yisroel Areivim is not an insurance policy and we encourage every person who can purchase a standard policy to do so. The more they invest, the more their families stand to receive in the event of tragedy, c'v.
Now, for the numbers. In order for a life insurance policy to really make a difference, it would need to provide a minimum $250,000.00 per child. This is based upon the need for $15,000.00 per year per child.
The maximum return on money, with no risk, is 2.5 per year, which means that the profit on $250,000.00 is $6,250.00 per year. The remainder of the money per child would need to come off the 'keren' for each of the ten years, and thus the 2.5 percent yield will decrease proportionately as well.
This option is an expensive one, and a great many frum families cannot afford the monthly payments in a budget weighed down by mortgage, food, tuition and car payments. Bear in mind that this type of policy is only for ten years and one would need to purchase it at a young age in order to get such a favorable rate.
As the age of a breadwinner increases, and health concerns arise, the price rises as well, and often those who need it most cannot afford it. In addition, so often the payout of several hundred thousand dollars is not nearly enough and then the families must resort to the benevolence of the community regardless.
As mentioned, Kol Yisroel Areivim fills a void not in theory- where everyone should have life insurance- but in practice, where many people do not. In fact, even if the deceased did have life insurance, but with a plan that gives less than one hundred thousand dollars per child, Kol Yisroel Areivim fills the gap.
The rabbanim and lay leaders at our head have drafted regulations that ensure that no individual has excessive power and to maintain accountability and fairness.
• The KYA Policy is open to all members of Klal Yisroel.
• All policies will be reviewed by a board of rabbanim and policy acceptance is contingent upon their approval.
• The rov of the shul where the deceased was a member, of a rov closely associated with the family, will oversee the transfer of funds and ensure that the needs of each individual child are met.
• The account is opened in the name of the surviving parents and the family rov, as well as a family guardian to ensure that the money is used or invested wisely.
• Kol Yisroel Areivim reserves the right to have applicants fill out a medical questionnaire that will determine eligibility. In the event that the questionnaire was filled out incorrectly, KYA reserves the right to terminate the agreement. Funds that were paid out must be refunded.
• Any issues that arise will be dealt with by the rabbinical board of KYA or its authorized arbitrator. Their decisions will be final.
• In the event of a member’s passing, the agreed-upon fees will be collected from the group's members. The funds will then be used to establish a trust for the children of the deceased. In the event that the group is complete ,with 16,500 members, the amount will be one hundred thousand dollars per child. If the group is incomplete, there will be a minimum payment of fifty thousand dollars per child
• The amount collected is $6.00 per orphan, with a maximum total of $288.00 per year.
• If the charge does not go through for a period of ninety days, membership will be terminated.
• The money should ideally be allocated for major expenses, such as tuition or marriage, but the rov assigned to the family will be the ultimate arbiter.
• Since this fund is meant as an opportunity give tzedaka, in a respectful fashion, to almanos and yesomim, no fund will be established for people that have life insurance in place, or a sufficient sum in cash/assets to render them ineligible of receiving communal assistance.
• Within the organization there is no single individual that has excessive control over the money.
• The office is run by five askanim that do the office and technical work,and each individual case is assigned one overseer from the central office. These people are efficient and knowledgeable and available to discuss any case or answer questions.
Obviously, there are others that wish to copy the success of our model, and it would serve the best interests of the klal if we could unite and join forces. For various reasons, this is not the case, however.
Our appeals are never based upon the drama of painting heartbreaking scenarios and thus using fear and guilt to convince the people. We much prefer to share the facts in an intelligent, clear fashion and respect the ability of people to make intelligent decisions.
Rabbi Horowitz, we are most grateful for your interest and for taking the time to study our plan and its benefits. Your willingness to ask hard questions is testimony to your concern for Klal Yisroel, and thus, it makes you a most fitting partner for our work. It is gratifying that there are people such as yourself that are realistic enough to recognize the potential problems, yet still hopeful enough to encourage positive change.
Respectfully,
Yoel Bochner
Monday, October 18, 2010
KYA Update: The Moving Ball
As you may recall, a Guest Post by an actuary titled "AREIVIM and Why I Don’t Like It" seemed to have set off an internet storm, which I attempted to follow. The last thing I knew, before the storm settled was that in addition to a few endorsements being pulled from the websites, the KYA director, whom I was very interested in hearing from directly, was a no show on Zev Brenner's Talkline. Since then, I hadn't seen anything on the program until I started getting my Rosh Hashana mail.
Seems the program has changed. Originally, the plan advertised a $100,000 fund to be set up for each orphan that meets certain qualifications. The $100K principal was advertised to remain in tact, and the interest can be used to defray day-to-day expenses. Those who join the plan were to be charged $6/7 (Vaad HaRabbonim, Kupat Hair) per qualifying orphan up to a maximum. The math is clearly problematic. While there are claims of professional review, none have been produced.
Currently, the Vaad HaRabbonim Rosh Hashana brochure advertised:
"Each member family contributes $2.30 through a one-time credit card charge or standing bank order, in the event that the child of a member family is orphaned. The immediately produces a $50,000 fun for the child. The interest helps to defray day-to-day expenses, while the principal serves for wedding expenses."
So, the fund is now being advertised in the brochure as half the size with a payment (per orphan?) of nearly on-third for a half-sized fund, while the website continues to advertise a $100,000 with a $6 per orphan charge.
Clearly, the ball is in constant motion. My readers know how I feel: buy term life insurance from a reputable company. You will know what you are getting. Clearly the directors of Vaad Rabbanim aren't quite clear on what they are even selling.
Signing off.
Seems the program has changed. Originally, the plan advertised a $100,000 fund to be set up for each orphan that meets certain qualifications. The $100K principal was advertised to remain in tact, and the interest can be used to defray day-to-day expenses. Those who join the plan were to be charged $6/7 (Vaad HaRabbonim, Kupat Hair) per qualifying orphan up to a maximum. The math is clearly problematic. While there are claims of professional review, none have been produced.
Currently, the Vaad HaRabbonim Rosh Hashana brochure advertised:
"Each member family contributes $2.30 through a one-time credit card charge or standing bank order, in the event that the child of a member family is orphaned. The immediately produces a $50,000 fun for the child. The interest helps to defray day-to-day expenses, while the principal serves for wedding expenses."
So, the fund is now being advertised in the brochure as half the size with a payment (per orphan?) of nearly on-third for a half-sized fund, while the website continues to advertise a $100,000 with a $6 per orphan charge.
Clearly, the ball is in constant motion. My readers know how I feel: buy term life insurance from a reputable company. You will know what you are getting. Clearly the directors of Vaad Rabbanim aren't quite clear on what they are even selling.
Signing off.
Wednesday, May 26, 2010
Areivim Continued
The issue of Areivim has really taken center stage on Rabbi Horowitz's blog (here too, but I think this will be my last word on the subject) and I think that those of us who care about yashrut, integrity, fiscal accountability and transparency, and about the mitzvah of tzedakah which not wanting to see it degraded owe a debt of gratitude for putting some leg work to investigate the Kol Yisrael Areivim organization.
In continued semi-literate response from Mr. Bochner, an elusive name behind KYA, names of "bored members" are finally named. Rabbi Horowitz has taken the time to contact some of the named Board Members and reports (see the comments) that at least one member claims not to be involved with this organization. In the meantime, the endorsements from the Agudah, NCYI, and the OU have been pulled from the website, although Mr. Bocher continues to name these organizations in his "answers" regarding the organization, its funding, and its structure.
I hope that those who have been falsely named as supporters or Board Members do not allow this issue to die quietly. Such would be an injustice to the Orthodox community as a whole, and the Yeshiva and Chassidish communities in particular, who are being sold a bill of goods as this program is promoted. It is also insulting when people, including leadership, say that the constituency wouldn't buy life insurance anyways. If you have a platform, you have an opportunity to educate. Don't waste it!
The system of endorsements by slapping a picture of a gadol is highly disconcerting to me. Correct me if I am wrong, but I believe the segulah based, gadol picture advertising is relatively new, as is the 8 page glitz and flash advertisements. I much prefer old and unimproved. Also of concern is that people who simply lack rudimentary education trying to start organizations up for which they haven't the foggiest idea what they are doing. It is amazing that people will let them run wild with millions of dollars in the name of tzedakah. We should remember that the mitzvah of tzedakah is an instruction to invest in the community, not throw your hard earned money in the wind and see which direction it floats in! One would think this an obvious point, but I'm afraid it isn't.
It wasn't too long ago that I reported on the news story of Rav Shteiman's home being robbed of a massive $50,000 of cash alone. The theft was an inside job and should have been prevented through some simple internal control measures. If this could happen, what would make anyone think that the same circle of people has the ability to run an unregulated "life insurance" company?
In continued semi-literate response from Mr. Bochner, an elusive name behind KYA, names of "bored members" are finally named. Rabbi Horowitz has taken the time to contact some of the named Board Members and reports (see the comments) that at least one member claims not to be involved with this organization. In the meantime, the endorsements from the Agudah, NCYI, and the OU have been pulled from the website, although Mr. Bocher continues to name these organizations in his "answers" regarding the organization, its funding, and its structure.
I hope that those who have been falsely named as supporters or Board Members do not allow this issue to die quietly. Such would be an injustice to the Orthodox community as a whole, and the Yeshiva and Chassidish communities in particular, who are being sold a bill of goods as this program is promoted. It is also insulting when people, including leadership, say that the constituency wouldn't buy life insurance anyways. If you have a platform, you have an opportunity to educate. Don't waste it!
The system of endorsements by slapping a picture of a gadol is highly disconcerting to me. Correct me if I am wrong, but I believe the segulah based, gadol picture advertising is relatively new, as is the 8 page glitz and flash advertisements. I much prefer old and unimproved. Also of concern is that people who simply lack rudimentary education trying to start organizations up for which they haven't the foggiest idea what they are doing. It is amazing that people will let them run wild with millions of dollars in the name of tzedakah. We should remember that the mitzvah of tzedakah is an instruction to invest in the community, not throw your hard earned money in the wind and see which direction it floats in! One would think this an obvious point, but I'm afraid it isn't.
It wasn't too long ago that I reported on the news story of Rav Shteiman's home being robbed of a massive $50,000 of cash alone. The theft was an inside job and should have been prevented through some simple internal control measures. If this could happen, what would make anyone think that the same circle of people has the ability to run an unregulated "life insurance" company?
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