Jonathan Rosenblum wrote a very important article Look Before You Leap about the new Charedi "life insurance" plan in Israel. As he points out it is not a life insurance plan and is quite problematic. I would like to relate to the points that he raises at the end of the article.
He makes 3 observations:
The first is the suspicion of experts. When the idea of a self-insuring group was first raised, the need to consult trained actuaries and lawyers with a background in insurance law should have been obvious.
There are a number of reasons for the Charedi population's suspicion of experts.
1. Charedi society in Israel denigrates all knowledge except for Torah. Secular education is kept to a bare minimum. Expert opinions on various subjects (such as the age of the world, evolution, and other areas that seem to contradict Torah) are made fun of. The overall atmosphere in the Charedi world is that everything is in Torah and that secular knowledge is unimportant and experts know nothing. When people in the Charedi world believe that Shlomo Hamelech could have invented cars, nuclear weapons etc., (see Could Shlomo Hamelech have invented cars?) then who needs secular experts? Given this atmosphere why would you think an expert opinion on this subject would be sought?
2. The average Charedi has no idea that there is such a thing as an actuary or that math can actually help here. When the extent of your mathematical education is arithmetic it is hard to relate to an actuary and understand that he actually has the tools to deal with these issues.
The second is the tendency to believe that we have found a way to outsmart the odds – the financial equivalent of Ponce de Leon’s fountain of youth. Every year or so, we hear of avreichim who have lost all their chasanah money in some new Ponzi scheme that promised 30% returns, with no risk.
The premise is simply mistaken. He assumes that the average Charedi avreich understands what a Ponzi scheme is and that a 30% return is not realistic. While Jonathan Rosenblum knows this, I know this, and everyone reading this knows this, I don’t believe that the average Charedi avreich in Israel knows this. Someone who has grown up completely sheltered from secular society, doesn’t read newspapers, etc., has no secular education, has absolutely no idea how the economy works, has no reason to think that a 30% return is out of the ordinary. Based on what should they judge an investment? They have been give no tools to make a judgment about the worthiness of an investment and therefore it is not fair to hold them accountable.
The sociology of our community is such that most families would not individually purchase relatively low-cost term life-insurance if they did not participate in this program. A group program sponsored by highly respected tzedakah organizations has a much better chance of providing some degree of protection to a large number of families.
Why can't we change the sociology? Why shouldn't the askanim go to the Gedolim, explain the problem, and offer a solution, low cost life insurance. If the gedolim would encourage everyone to buy life insurance wouldn't people listen? Why should we agree to a solution that is a poor second to real life insurance?