h a l f b a k e r yClearly this is a metaphor for something.
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Anyone over the age of 40 can join this insurance. Unlike other insurances it is free*. There are no monthly payments. You simply sign the contract, sit back and wait until you retire, at which time you get paid a monthly allowance.
What are the catches? a) The contract ensures that when you die,
80% of your assets and life savings are passed on to the insurance company. This gets thrown in a pot along with the other "inheritances" and distributed equally among the surviving members. b) The contract is irreversible. Once you are in there is no way out. This is to prevent leeching. There is, however, a 3 year trial period during which you still may cancel the insurace.
* at the point of sale
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A lot of old people use up their life savings paying for medical care. How would you handle that? |
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Also, I worked for the Department of Social Services and the biggest cheats were old farts who put everything into their children's names so as to appear as paupers. They then qualified for benefits. How would you deal with that? |
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Sounds like the blow all your money before you die plan. I sounds like the only money that would make it into the plan was from sudden deaths of healthy people. You wouldn't get much from old people as they would either give it to their retirement homes for rent or the hospitals for care. |
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would you not get people that just do not save any money even if they could because they do not have to? |
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As long as this pension provides only a fraction of the amount of money needed to live in luxury, the pensioners would still have an incentive to save their money. |
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Not being in a wealthy family, anything that redistributes wealth sounds good to me. |
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I like the transparency of adjusting benefits based on the pool. |
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>>would you not get people that just do not save any money even if they could because they do not have to?<< |
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Yep. This is called "moral hazard" and it is a problem that plagues the insurance industry in general. |
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Moral hazards do reduce the profitability of insurance schemes, but they don't make them inviable. |
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People would still save money (perhaps a little less) because this insurance alone would not be enough to cover their entire pension. It would only be a supplement. |
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