RIDEGURU
Hi everyone,
I'm doing some research on a somewhat novel income protection product called a bread fund (or Broodfond in the Netherlands where it originated). A bread fund works like this: A group of typically 20-50 self-employed people create a fund, make monthly payments into it, and then the fund provides basic monthly income for those too ill or injured to work. Fund members may claim benefits for up to two years, and the payouts are classified as donations so they're not taxable as income. The money you pay into the fund is yours, and you can withdraw it anytime (less any donations you may have made to fund members who have claimed benefits). I'm interested in a few things:
1) Would you be interested in something like this?
2) How much would you be willing to pay in a one-time activation fee to sign up for a bread fund?
3) How much would you be willing to pay in a monthly fee to the fund manager for account administration, tips, advice, etc.?
Comments
Interesting idea. I have some questions:
How much do people typically pay in per month? Is it a percentage of income?
How do people find a fund to join? Do you have to come with people you know, or can you somehow find an existing group that's looking for new members?
What is the advantage of doing this in small groups like this rather than pooling income from all participants (more like disability insurance)?
Monthly contribution would be based on what you want your monthly benefit to be if you make a claim. Basically you could pay anywhere from 30-100 USD per month. But again, that remains your money.
There has to be some coordination to join a fund. For example, a few friends/professional connections would start a fund and invite fellow freelancers they know. The personal connection is to ensure trust and a sense of community with fund members. New members are added by invitation only.
The advantage of keeping groups relatively small is to make sure everyone knows at least someone (ideally multiple people) in the fund. This disincentivizes cheating or fraudulent behavior and builds community for sharing advice, resources, etc.