X-Message-Number: 1238 Message-Id: <> Date: Mon, 28 Sep 92 14:06 PST From: (Keith Lofstrom) Subject: CRYONICS - Alcor should not provide life insurance Having an organization like Alcor run its own life insurance has disadvantages. This is an area where a financial type could probably walk all over me (Perry? Eric? go ahead, but take off the golf cleats :-) ), but I'll try anyway: Disadvantages for self-funded life insurance: - 1) Life insurance is profitable to life insurance companies because most life insurance customers treat it differently than we do. The "average" customer is a breadwinner making provisions for supporting a family if they should unexpectedly die. If they buy whole life or universal life insurance (which may not be wise for them) they are buying the product as if they will keep the insurance for the rest of their lives, when in actuality they usually cash out when the children leave home - receiving a small fraction of the death benefit. The cryonics customer stays in, and has a much higher chance of collecting; as a result, we probably represent much less profit, as a group, to the life insurance companies. We may even represent a net loss, but as a group are too small to set up "special" policies for. - 2) Life insurance spreads over a larger, more diverse group. We have a lot of the same habits, folks; we are going to tend to die at the same time of the same things - like some terrorist dumping poison into Saul's life extension mix, or keyboards causing finger cancer. Those "peaks" are going to be hard to handle financially and operationally as it is; the burden would be magnified if Alcor was doing moving money from its own investments to pay for suspensions. - 3) An Alcor providing life insurance would have incentives to drive away older members. Milk 'em for 20 years, then start sending them fundamentalist bible tracts. - 4) Now we would get to fight a whole new bureaucracy - the insurance comissioners! They may not like it if we tune our term insurance tables for our subgroup and our needs, rather than the general public. They may not like us, period. - 5) There is enough temptation for Alcor officers to abscond with the funds as it is. I would like to keep the temptation as small as possible for as long as possible, especially if we are going to pay them peanuts. - 6) If the life insurance companies are making huge profits, we should invest the patient care fund in them. Are they really? - 7) Do we really want Alcor to have incentives to turn away high risk subpopulations? - 8) We probably wouldn't be very good at running life insurance; if we were, some of us would be doing that now, for a living. Alcor doesn't make its own liquid nitrogen, and probably never will ( though a small plant to remove some of the residual LOX may happen - another subject for later). Alcor doesn't weld up its own dewars - they are made elsewhere. Most things are cheaper to buy than to make yourself. Rule of business - stick to what you are good at. ------ There are some reasons why a cryonics-friendly organization ( NOT Alcor ) SHOULD supply insurance, even if more expensive: + 1) It minimizes some of the fund transfer hassles, if there are any. + 2) It reduces our dependence on death certificates. + 3) It increases the incentive to help keep us alive. The best way to save money on suspensions is to keep the membership from needing them. + 4) We may actually be healthier than average people. Perhaps we could save money. Personally, I think none of the advantages are compelling reasons to pick up another activity. For us supporting members of a small volunteer organization like Alcor, our time is better spent in getting filthy rich doing the things we are good at, and socking that money away for Alcor's current or eventual use. Keith -- Keith Lofstrom Voice (503)-520-1993 KLIC --- Keith Lofstrom Integrated Circuits --- "Your Ideas in Silicon" Design Contracting in Bipolar and CMOS - Analog, Digital, and Power ICs Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=1238