Like Life Insurance for an Ultra-Orthodox Community — But Not Quite
Nothing Fancy: A simple printed note on the door marks the center of the charitable operation. Image by josh nathan-kazis
By Josh Nathan-Kazis August 17, 2014
When a parent of young children dies in ultra-Orthodox Brooklyn, local activists take up a collection.
They post fliers on the street, featuring heartrending images of the orphans; host events in living rooms and local banquet halls, and try to cobble together a nest egg to keep the family fed and marriageable.
Or at least that’s how it worked until 2008. In the depths of the recession, these activists, or, as they are known in the community, askanim, found it hard to make the ad hoc campaigns pay off. So a few of them in Boro Park decided to try something new.
The idea was simple: Get a group of observant Jews to agree to be billed automatically each time a family within the group suffers the loss of a parent. The catch: If you die, your children can collect only if you had previously paid in.
It seemed an ingenious solution, doing away with costly fundraising campaigns and professionalizing the whole endeavor. Yet it brought problems. It all looked a bit like an insurance plan, though these communal collections went entirely unregulated. Observers worried that the fund wouldn’t be able to pay out when it was needed. And there were at least two groups trying to start similar schemes, neither with much transparency.
In 2010, a prominent Orthodox blogger condemned the concept and its execution, suggesting that members drop out of one of the groups.
Today there’s just one organization left, and it’s crossing its t’s and growing fast. Called Areivim USA, the Boro Park-based charity says it has 13,000 member families and has raised money for 91 orphans since 2009. In April, the group got a written opinion from a big downtown law firm arguing that it’s not offering insurance and as such does not need to be licensed. Now the group is poised for expansion within the ultra-Orthodox world.
“Instead of making a lot of noise to get money and to soften people’s hearts, it’s an easier way,” said Yosef Fishman, who runs Areivim USA. “Now there’s no expense involved, no humiliation, and the amount — they never used to be able to get such [an] amount.”
One of Areivim’s board members, Moshe Green, said that the old ad hoc system worked better when the parent had died in a high-profile accident. “Quiet people, no one knew about them, it wouldn’t help to come out with posters,” Green said. “It was very difficult.”
Though the new plan solves those problems, some still wonder whether it makes sense. “It’s my strong recommendation that everyone get traditional life insurance,” said Rabbi Yakov Horowitz, the Orthodox blogger and educator who wrote the original post in 2010 raising concerns about the idea. “I’m glad a lot of thought was given to fix some of the very serious problems [that] there were there when I wrote about it [in 2010]. But I still would say, without hesitation, that people should sign up for a typical life insurance policy.”
Areivim USA’s offices are in a rundown building on 13th Avenue in Boro Park, above an electronics store. Areivim’s logo is printed on a white sheet of computer paper taped to the door of its third-floor office.
Officially, the organization has no staff. The group shares space with two ultra-Orthodox charities, one called American Friends of Kupat Ha’ir, the other Ezras Yisroel. Fishman, who runs Areivim, is the top official at all three not-for-profits. He said that staff members from the other groups and other assorted volunteers give their time to make Areivim work. A bearded member of the Boyaner Hasidic sect, Fishman also has a day job as a Talmud teacher at an ultra-Orthodox yeshiva.
Millions of dollars have moved through the group since it was founded. Organizers say that people from across the ultra-Orthodox spectrum have joined. The basic enrollment requirement, as spelled out in the group’s rules: “Acceptance in Areivim USA is based on the family’s commitment to Torah and Mitzvos.”
Fishman said that the idea for Areivim came from Israel, where it was first implemented by people connected with the ultra-Orthodox charities Vaad Harabonim and Kupat Ha’ir. Fishman’s group American Friends of Kupat Ha’ir, which raises money for the Israeli organization by offering sponsored prayer sessions at Israeli holy sites, set up its version of Areivim in 2009. Vaad Harabonim’s American fundraising arm set up a similar group at the same time, though it no longer exists.
Fishman and his associates set their own terms for Areivim, which differ slightly from those of the Israeli version. When a member dies, the group charges all subscribers $7 per surviving unmarried child under 35 years old. The goal is to raise $100,000 for each child. Areivim has roughly 13,000 members, so at $7 per member, it’s bringing in less than $100,000 per child.
“We only give as much as we have,” Fishman said. “There’s no commitment to anything.”
That’s different from a life insurance plan, which by its nature promises to pay out if the policyholder dies. Areivim’s leaders and publications insist that the program works alongside actual insurance plans, and that some members also carry term life insurance. Still, Fishman said that some small part of the ultra-Orthodox community follow marginal ultra-Orthodox religious opinions that advise against buying traditional life insurance for religious reasons. Other ultra-Orthodox Jews may not buy life insurance because they believe they can’t afford it.
“The fact of the matter is, some people don’t have life insurance, and they fall on the burden of the community,” Fishman said.
Once Areivim’s money is raised, the group sets up a bank account for the family, overseen by a rabbi from their community, a family member and a businessman. The recipients are meant to use the funds to pay for major expenses, like weddings.
“We want to stretch the money as far as possible,” said one businessman who sits on a committee overseeing a fund created for a family after the father died in February 2011. That family of four children plus a surviving wife received $240,000. The businessman, who asked not to be identified because of the private nature of the fund, said that the money for the children was being set aside for marriage expenses, and a portion raised for the widow was being used for living expenses.
There are strict limits on the group’s fundraising. Areivim will charge members a maximum of $28 per month. That means that it can raise money for, at most, 48 children per year.
The group’s informational packet is six pages long and full of caveats and warnings. Among other things, Areivim says it may not pay out in the event of a major disaster; it won’t pay out if it determines that a person was already ill when he or she joined the group, and it won’t pay out twice if two parents in the same family die in succession.
The packet also protests repeatedly that it is not an insurance policy. If it were an insurance policy, the group would be subject to extensive regulations and oversight by the New York State Department of Financial Services. That agency did not respond to repeated requests for comment from the Forward. Areivim, for its part, maintains that it’s exempt from such regulations.
In April the group commissioned a report from the prominent Manhattan law firm Stroock & Stroock & Lavan LLP on whether its plans constituted insurance. Stroock’s attorneys argued that since Areivim does not guarantee to pay out, its products are not classified as insurance. Areivim declined to provide the entirety of Stroock’s report to the Forward, but it did provide its conclusion, which reads, in part, that Areivim “is not issuing insurance contracts, because Areivim does not have an obligation to confer benefit of pecuniary value upon another party in the event of the death of one of its members.”
Stroock therefore concludes that Areivim does not need to be licensed by the state’s DFS.
That may not be reassuring to members, who could be relying on it to provide for their families. Term life insurance can be cheap. A 30-year-old nonsmoking man in good health and living in New York can get a $1,000,000 term life insurance policy for $31 per month from New York Life, according to the agency’s online quote generator. A $500,000 term life policy would cost him $26.
Areivim charged its members, on average, $13 per month from 2010 through 2013.
According to Tom Baker, an expert on insurance law at the University of Pennsylvania Law School, Areivim is similar to the noncommercial insurance-type arrangements more common before the 20th century. “You don’t need to know the right amount of money to charge in advance,” Baker said. “You don’t have to have an actuary to figure out mortality rates.”
Unlike traditional insurance, Areivim relies on fellow feeling within a tight-kni t community. The payments go to other individuals, Horowitz noted, not to an insurance company’s actuarial pool. “In the population at large there really isn’t that notion that everybody takes care of everybody,” Horowitz said. “It’s extraordinarily strong in the Orthodox community.”
Contact Josh Nathan-Kazis at [email protected] or on Twitter, @joshnathankazis
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