Since my own personal ecosystem reveals minimum traces of optimism, it tickles me to imagine people taking on challenges I’d have given up on before I started. Had I been informed about the planned space program in the Sixties, I can imagine my immediate response:
“The moon? That’s far.”
The greatest thing that ever happened to humankind – and they’re not even aware of it – is that not everybody is like me. If everyone were like me, there’d be a lot of great things that would never have gotten done.
If I had discovered America – assuming they could get me on the boat – this would have been my report:
“Big. Not a lot of gold. Scary Indians. Recommendation: Don’t bother.”
This brings me to a challenge, perhaps of a less lofty nature, that I’d certainly never have taken on: being the first life insurance salesman. I know the concept of insurance was around for some time. It first involved insuring cargo against the possibility of the ships’ sinking, or being plundered by pirates (“Arrrrr.” Or, if they were Asian pirates, “Lllll”)
Insuring boat cargoes eventually led to the insuring other valuables – property, crops, and, inevitably, the lives of human beings.
So here we go. Imagine the Everest-like challenge of a novice life insurance broker, sitting in some living room, trying to persuade the first customer to sign on the dotted line, a customer to whom the concept of life insurance is entirely unknown:
THE FIRST LIFE INSURANCE CUSTOMER: Explain this to me again.
THE FIRST LIFE INSURANCE BROKER: Of course. And by the way, I really admire you taste in furniture.
CUSTOMER: Thank you. Explain this to me again.
BROKER: Tell you what. You explain it as you understand it, and I’ll jump in when you need help.
CUSTOMER: I’ll give ‘er a try. Okay, to get this insurance thing, we have to pay you money every year.
BROKER: You call it paying money. We call it buying peace of mind.
CUSTOMER: That’s kind of nauseating.
BROKER: Sorry. Our techniques are still being field-tested.
CUSTOMER: Okay. So we’re buying “peace of mind” every year. And then, when I die, a death benefit gets paid to my wife.
CUSTOMER: Why don’t we just keep it?
BROKER: Keep what?
CUSTOMER: The money. We pay you money, and you give it back to us. Why don’t we just keep it ourselves?
BROKER: Okay, I see the confusion. We’re not talking about paying you back what you paid in.
CUSTOMER: You’re not.
BROKER: That wouldn’t make sense.
CUSTOMER: Who needs you to hold our money?
CUSTOMER: We could just keep our money and cut you out entirely.
BROKER: If that were how it worked. However, what I’m saying is that, after you pass away – and we hope that won’t be for a long, long time – the death benefit we pay your wife will be substantially greater than the sum of the premiums you paid in.
CUSTOMER: You’re gonna pay us more than we paid in.
CUSTOMER: I don’t believe you.
BROKER: It’s true. That’s how life insurance works.
CUSTOMER: Well, it’s not going to work for long. I’m no genius, but I know if you give us back more than we paid in, you’re going to lose your shirt.
BROKER: True. If we only have one customer.
CUSTOMER: If you give lots of people back more than they paid in, you’re going to lose your shirt even faster.
BROKER: I think we’re missing the concept…
CUSTOMER: Everyone gets more than they paid in. If that don’t beat all. How can anyone imagine they’re going to make money….do you have a rich father, or something? He couldn’t be a businessman. He’d have told you this is a really stupid idea.
BROKER: I respectfully disagree. You see, we expect to have a large number of policyholders, and by investing their premiums, we’ll have sufficient revenues to cover the death benefits while retaining a reasonable profit for ourselves.
CUSTOMER: Lemme tell you where you’re wrong.
BROKER: Be my guest.
CUSTOMER: This scheme depends on selling a whole lot of policies.
BROKER: We intend to.
CUSTOMER: Fine, but what if you don’t? Say you only sell one policy. To us. I’m speaking hypothetically here, because that’s not likely to happen. But say it’s just us. One premium. Very little to invest. After expenses – office space, phones, lunches – you've got nothing. What happens then?
BROKER: You don’t understand…
CUSTOMER: I understand fine. You’re asking me to buy the first policy. If that’s the only one you sell, we’re in the soup.
CUSTOMER: My wife comes to you. “I’m here for the money.” You say, “We don’t have any.” What am I going to do, return from the dead and punch you in the nose?
CUSTOMER: I know. You intend to sell a lot of policies. Fine, let’s say you do. You sell a lot of policies, invest the premiums, and the investments go bust. “We’re here for our money.” “We don’t have any.” It’s the same thing. Except a lot of people want to punch you in the nose.
BROKER: But we invest very prudently…
CUSTOMER: Someday there’ll be a company called Enron. But okay. You sell a lot of policies, you invest very prudently. What happens if we all die at the same time?
BROKER: I beg your pardon?
CUSTOMER: Your customers. We croak simultaneously. Do you have enough to pay all the death benefits at the same time?
BROKER: This is a highly unlikely scenari…
CUSTOMER: Wars. Plague. A bad year for dying. Sweet Juniper, you haven’t thought this through! You don’t sell enough policies, your investments go bust, and everyone dies at the same time – we’re sunk! And you say not buying insurance is a gamble?
BROKER: Well, in truth, there are provisions called “Acts of God”, which, in the unlikely event they occur, immunize us against having to pay benefits.
CUSTOMER: “Acts of God.”
BROKER: Yes, sir.
CUSTOMER: When there are “Acts of God”, you don’t have to pay.
CUSTOMER: And who determines whether something’s an “Act of God”?
BROKER: We do.
CUSTOMER: CUSTOMER: Get out of my house.
And that’s why there is no life insurance business today.
There is? And they’re flourishing?
Well, there I go, being negative again. Apparently, this life insurance deal is easier than I thought.