I think the difference is that a charitable remainder trust is a very major commitment, not many people will go for that. It seems geared towards people who have a lot of money and do not really intend to earn any more. I would imagine that many people who commit to this are older, retired. Or else, they are extremely rich.
(and I love the idea of charitable remainder trusts too, by the way!)
In principle, in my idea, the charity is NOT going to be giving you a regular income, or anything at all, barring unforeseen circumstances. So it is a more limited connection.
But to answer the central thrust of your comment: In an ideal world, these and other ideas would be very visible and popular options for people of all ages. In terms of managing them, insurance contracts could indeed play a role, whether that be an insurance taken out by the individual but paid from the funds, or an insurance taken out by the charity which would be used to pay for individual problems.
If I were to re-write this post, I would have included a reference to these—but frankly I’ve only just read about them now following your comment!
One point here is that insurance policies have negative expected value—we pay more in return for the company assuming the unpredictability. So in an ideal world this would be a large enough scheme that we could avoid anyone paying additional fees to insurance companies. For example, if 1000 people were doing this and it was expected that 5% would claim back, it might be more cost-effective to maintain at least 5% liquidity than to spend money on an insurance contract. But obviously, this is an executional detail.
Thanks for this comment.
First, there are indeed parallels.
I think the difference is that a charitable remainder trust is a very major commitment, not many people will go for that. It seems geared towards people who have a lot of money and do not really intend to earn any more. I would imagine that many people who commit to this are older, retired. Or else, they are extremely rich.
(and I love the idea of charitable remainder trusts too, by the way!)
In principle, in my idea, the charity is NOT going to be giving you a regular income, or anything at all, barring unforeseen circumstances. So it is a more limited connection.
But to answer the central thrust of your comment: In an ideal world, these and other ideas would be very visible and popular options for people of all ages. In terms of managing them, insurance contracts could indeed play a role, whether that be an insurance taken out by the individual but paid from the funds, or an insurance taken out by the charity which would be used to pay for individual problems.
If I were to re-write this post, I would have included a reference to these—but frankly I’ve only just read about them now following your comment!
One point here is that insurance policies have negative expected value—we pay more in return for the company assuming the unpredictability. So in an ideal world this would be a large enough scheme that we could avoid anyone paying additional fees to insurance companies. For example, if 1000 people were doing this and it was expected that 5% would claim back, it might be more cost-effective to maintain at least 5% liquidity than to spend money on an insurance contract. But obviously, this is an executional detail.