Now Wall St. is going after life ins!

[napi21]

http://www.msnbc.msn.com/id/32712744/ns/politics-the_new_york_times/

After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

Ya gotta love these guys! If they thought they could make a buck selling your heart, that would be the new market!

[Raven]

1. I've heard ads for this on the radio and I don't quite understand how it works.

One ad says that a guy who can no longer afford his policy of $1m will sell it for $400k. Does this mean that he keeps the policy but some investor pays the premium and when the guy dies the investor gets the $1m? How can this be legal?

[Uben]

2. Anything can be legal if you have enough money....

... to buy the lawmakers!

[Raven]

5. I guess, but I didn't think these policies were assignable.

[napi21]

4. I don't know how it works wither, but I would guess when the

policy us sold the owner changes the beneficiary to the buyer. Since the owner of the policy is free to name anyone as beneficiary, I doubt it would be illegal.

[Raven]

7. I thought is was illegal for a beneficiary to have no real relationship

to the policy holder. I'm thinking of the story of those women in CA who befriended homeless men and took LI policies out on them and then poisoned them.

[Telly Savalas]

17. Here's what appears to be a pretty good article describing them

http://quatloos.com/life_settlement-life_settlements.htm

I found this via google. As a disclaimer, I know very little about life settlements and know nothing about the hosts of this website, so I can't tell if they're trying to sneak any bullshit in or not. However, it does look like it gives a good explanation as to how the things work, who benefits, who gets screwed, and why.

[malaise]

3. They will make way more than a buck selling hearts

I have no doubt they are already making gazillions selling people's organs.

[Eric68601]

6. You know what that sounds like?

That sounds like a potential death panel in the making.

[northernlights]

14. my first thought, too

now they are even more incented to kill us off.

[no_hypocrisy]

8. This sounds more unstable than the mortgages.

[corpseratemedia]

9. so what happens to beneficiaries when the holder dies?

they'll be forced or pushed to "settle" when the policy-holder dies? Or is it stripping insurance companies of the ability to payout when someone dies? The investors actually keep paying the premiums? Are investors actually buying premiums and grouping them and selling them? I think (the latter) that's what it sounds like.(??)

from the article:

"But if a policy is purchased and packaged into a security, investors will keep paying the premiums that might have been abandoned; as a result, more policies will stay in force, ensuring more payouts over time and less money for the insurance companies. "

[fasttense]

10. Wow, this sounds like a joke.

I mean basically Wall Street would be making billions off of DEAD PEOPLE.

They would be betting Americans would die. Wall Street would then have incentives to PREVENT research in extending life or curing cancer. Wall Street would have incentive to destroy the American economy in the hopes more people would die of starvation. Wall Street would have another reason to insure people DID NOT get medical care.

Any tragedy that killed people, especially if it killed lots and lots of people, would benefit Wall Street. This is just plain crazy.

Have they no decency, have they no shame?

[global1]

15. It Will Be Open Season On The People That Surrender Their Insurance Policies To.....

this scheme. They will have a price on their head. The investors will hire bounty hunters and split the booty with them if by chance that one of these people unfortunately wound up dead.

[Eric68601]

11. Hmm

I WONDER... Have they made a deal with the Soylent Corp. yet?

[SammyWinstonJack]

16. .

:evilgrin:

[Eric J in MN]

12. Break up the big banks.

Unless the big banks are turned into a bunch of small banks, we'll be told they're too-big-to-fail when these life-insurance securities fall.

[TwilightGardener]

13. I would never make myself much more valuable dead than alive.

That's asking for trouble.