My father was a life insurance man for a great part of his adult life. I remember once, as a young boy, I asked him about what would happen everyone insured by a certain company died at the same time. His answer was brief and simple: “Then the insurance company goes out of business.”

It was an interesting response, because, even then, as a ten year old, I had the idea that there was some sort of indestructible or incorruptible quality to life insurance, any type of insurance. That’s why it was there, wasn’t it? To insure against disaster. The problem is that nothing insures against all disasters. Who insures the insurance company against disaster? And who insures them? And what good is Death Star Insurance if you are a resident of Alderaan and Grand Moff Tarkin is up there with his trigger-finger at the ready?

People have wondered about Warren Buffett’s comments of a few years ago in Fortune Magazine about financial derivatives being weapons of mass destruction. Many prominent economists don’t really understand what exactly he meant. Many even disagree with his assessments. Why would Mr. Buffett make such a statement, anyway?

The answer is, once again, Simple: He’s an insurance man. Warren Buffett has made a fortune from various forms of insurance businesses. He understands insurance, just like my dad did. He knows that nothing is incorruptible. He doesn’t believe in economic theories; he believes in actuarial tables.

He’s a real insider, not an economist, a person who makes his living from the insurance industry. He’s spent more time studying those actuarial tables than just about any executive underwriter at John Hancock or Metlife.

Derivatives are, in fact, Death Star Insurance. Warren Buffett suspects it, but he has so much on the line, and being only human, he still, I’m sure, has a hard time facing a possible reality that he can in many ways envison all too well.

Weapons of mass destruction? Aren’t those things like nuclear bombs? In a metaphorical sense, I would have to guess this is what Mr. Buffett meant. I don’t think he was talking about rifles or machine guns or even bazookas. Maybe something serious is brewing with this economy of ours here. Ask your insurance man about it. Bull