The Obvious Fix We Keep Ignoring: Why We Need Poverty Insurance

Disclaimer:

I’m a credentialed actuary (Fellow of the Casualty Actuarial Society), and I’ve spent my career thinking about risk, resilience, and systems that break under pressure. But the ideas shared on this site—especially around Universal Basic Income—are not formal actuarial opinions or professional advice. While I bring the mindset of an actuary, this work is not affiliated with any employer or actuarial organization. They’re part of a personal exploration: a thought experiment grounded in systems thinking, economic curiosity, and a deep desire to build something better.

Please treat this work as an invitation to think, not a technical report. Any errors or oversights are entirely my own.

We insure everything—cars, homes, health, even our phones. But the biggest risk of all? Running out of money when life happens. Poverty is rarely a moral failure—it’s the sort of risk we all face, as random as a cancer diagnosis or a flat tire on the way to work. Yet we expect people to save, beg, or gamble their way to security. This is broken. Universal Basic Income (UBI), framed as poverty insurance, can fix it—unlocking potential, reducing fear, and fueling progress. With 20% of U.S. households living paycheck to paycheck (Federal Reserve, 2023), UBI relieves the fear that traps millions.

🛡️ UBI: Insurance, Not Charity

UBI isn’t a handout—it’s insurance. Like fire insurance, it doesn’t ask why your house burned down. It just pays out so you can rebuild. A guaranteed monthly income, no paperwork or stigma, gives people a floor to stand on when income disappears. It’s a reset button—letting people breathe, recover, and move forward.

Life is unpredictable. A layoff, illness, or family crisis can strike anyone. Poverty is often just bad luck, not a moral failing. UBI replaces the shame of falling with the security to rise.

Takeaway: Poverty is financial vulnerability, not failure. Insurance fixes that.

💸 Cheaper Than the Status Quo

Critics ask, “How do we pay for UBI?” The better question: “How much are we already paying for failure?”

The U.S. spends over $700 billion annually on welfare programs like SNAP, Medicaid, and housing aid—systems riddled with gaps and inefficiencies. Add hidden costs:

  • Emergency healthcare for the uninsured: $40 billion/year

  • Incarceration: $80 billion/year

  • Poverty-related stress: $500 billion in employer losses from absenteeism and turnover (APA, 2023)

UBI could streamline this patchwork, replacing dozens of conditional programs with a simple, efficient payout. Redirecting welfare budgets, taxing wealth concentration, or leveraging automation dividends are being studied to make UBI fiscally viable.

UBI spends a little to secure a lot. When families no longer hoard for survival, they invest in education, start businesses, or take smart risks. The result? Growth. In Stockton, California, recipients of $500/month found full-time work faster and boosted local economies.

Takeaway: We’re spending billions to fail slowly. UBI costs less and works better.

📈 Inflation as a Market Signal

Yes, UBI increases demand—and that’s the point. Skeptics worry about inflation in housing or essentials, but inflation is also a signal. Markets miss the demand for affordable housing or healthcare because low-income people lack purchasing power. A modest UBI makes that demand visible, attracting innovation:

  • More housing construction

  • Better healthcare delivery

  • Cheaper supply chains

With tools like rent control and supply-side reforms, modest inflation can drive progress without destabilizing markets. UBI isn’t a silver bullet—it’s a trigger for markets to solve real problems.

Takeaway: Inflation isn’t failure—it’s feedback. Markets respond to what people can afford.

🛠️ Work, Contribution, and Hope

Does UBI discourage work? Evidence says no. In Alaska, Finland, and Stockton, recipients didn’t quit—they improved their lives:

  • More education

  • More entrepreneurship

  • Better jobs

  • Less stress

While pilots show promise, larger trials are needed to ensure UBI supports essential labor markets like retail or caregiving. UBI frees people to contribute meaningfully—not just through paid labor, but through caregiving, volunteering, and creative work that enriches society. Poverty drives disengagement, not laziness. Give people security, and they act. The data proves it.

Takeaway: People don’t need pressure to act. They need permission to hope.

🤝 Charities Freed to Focus

UBI doesn’t fix everything. Addiction, mental illness, and discrimination require targeted help. But today, charities and social workers are stuck plugging basic needs—shelter, food, transport. It’s like treating illness without clean water. UBI complements existing services, allowing charities and public programs to tackle deeper issues with greater focus.

With UBI, every person comes with a string of cash for long-term stability. Charities can heal, not just patch. Imagine helping someone recover without asking, “How will they eat next week?”

Takeaway: UBI lets charities stop playing defense and start changing lives.

🏦 Escaping the Self-Insurance Trap

Why do people save? Not for luxury, but fear:

  • Job loss

  • Illness

  • Aging

  • Being a burden

This self-insurance tax forces families to hoard, entrepreneurs to hesitate, and workers to cling to bad jobs. UBI replaces this trap with a public solution, not removing effort but removing panic. It lets people spend, invest, and act as if someone has their back—because someone does. We mistake hoarding for ambition, but it’s survival.

Takeaway: UBI doesn’t replace hustle—it replaces fear.

🚫 Why the Market Can’t Do This

Private poverty insurance fails:

  • Adverse Selection: Only high-risk people enroll, spiking costs.

  • Moral Hazard: Payouts based on need invite fraud.

  • Profit Conflict: The neediest are the least profitable.

Only governments can mandate universal participation, redistribute fairly, and build trust over generations. UBI is a utility, like roads or water, not a product.

Takeaway: Poverty insurance only works if it’s universal. That means public, not private.

🔍 Why the Resistance?

Why hasn’t UBI happened? Five myths trap us:

  1. Saving = Success: We mistake hoarding for ambition, not fear.

  2. Fear = Responsibility: We glorify emergency funds instead of asking why they’re needed.

  3. Elites Don’t Feel It: The wealthy have safety nets—family, networks—and assume others do too.

  4. Insecurity = Profit: Payday lenders and gig platforms thrive on fear.

  5. Simple = Naïve: Big ideas feel childish—until they work.

UBI is like democracy: obvious in hindsight, impossible until tried.

Takeaway: The system resists UBI not because it’s wrong—but because it threatens what’s comfortable.

🛡️ A Dividend on Progress

UBI isn’t a giveaway—it’s a dividend on progress. Automation, technology, and globalization create vast wealth, concentrated at the top. UBI distributes a share to everyone, ensuring prosperity for the many. It appeals to progressives as justice and conservatives as bureaucracy reduction, building a coalition for change.

Like Social Security, which 70% of Americans support (Gallup, 2024), UBI can become untouchable. Locking it into law shields it from political swings. Universality builds trust; trust builds permanence. The future is automated—but it doesn’t have to be unequal.

Takeaway: UBI turns progress into shared prosperity.

🌍 Solving It Once, Starting Here

UBI is a technical challenge we can solve. Like any infrastructure, it requires robust systems to ensure smooth delivery, a challenge our tech expertise can meet. Get it right in the U.S., and we solve poverty forever, freeing humanity to focus on bigger problems. Starting here builds a blueprint for global adaptation, tailored to each nation’s economy, like Kenya’s GiveDirectly model. UBI isn’t utopia—it’s infrastructure.

Takeaway: Solve poverty here. Then solve it everywhere.

🌱 A Better Economy—Insured

UBI doesn’t replace work—it replaces fear. It empowers people to:

  • Take smart risks

  • Contribute meaningfully

  • Live with dignity

  • Build futures, not hoard safety

Poverty insurance isn’t just protection—it’s power. It’s time to insure the people and unlock their potential.