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Lawyer's Heirs Fight Insurers in $56 Million Policy Intrigue
- perlpimp 16y agoThis is not really hacker news IMO, belongs more on Fark.
- tkahn6 16y ago"From 2004 to 2008, tens of thousands of older people sought to make some fast cash by taking out multimillion-dollar policies on their own lives and flipping these to brokers, who resold them to investors like hedge funds and investment banks." That's amazing. And these are essentially no-risk investments. Am I understanding this correctly?
- jancona 16y agoAsk the investors if they think it was a no-risk investment.
- klous 16y agoWell, it would be an investment with an uncertain payout at some undetermined point in the future. The person flipping their policy could be 55 and live to 85, and your investment is tied up for 30 years awaiting the payoff. The risk would come if these are term life insurance policies, as in, the person might die within the term of the policy, or might outlast it and not pay out.
- Devilboy 16y agoThere's a whole industry around this - seeking out terminally ill people with life insurance policies and buying the policies at a discount while the client is still alive.
- rjb 16y agohttp://en.wikipedia.org/wiki/Life_settlement http://en.wikipedia.org/wiki/Life_settlement and http://en.wikipedia.org/wiki/Viatical_settlement http://en.wikipedia.org/wiki/Viatical_settlement
- fr0sty 16y agoThe investment is only good if the actuarial tables prove to be correct. For a counter example see: http://en.wikipedia.org/wiki/Jeanne_Calment http://en.wikipedia.org/wiki/Jeanne_Calment In 1965, aged 90 years and with no heirs, Calment signed a deal to sell her former apartment to lawyer André-François Raffray, on a contingency contract. Raffray, then aged 47 years, agreed to pay her a monthly sum of 2,500 francs until she died, an agreement sometimes called a "reverse mortgage". Raffray ended up paying Calment the equivalent of more than $180,000, which was more than double the apartment's value. After Raffray's death from cancer at the age of 77, in 1995, his widow continued the payments until Calment's death.
- qq66 16y ago"Days after New York attorney Arthur Kramer died unexpectedly at age 81" I can't really consider any 81-year-old's death to be unexpected. Which makes me wonder why anyone was underwriting life insurance for him.
- sireat 16y agoI had a chance to look at death tables recently and the drop off is rather dramatic for men starting at around 75 (for women it is noticable at 85 or so). That said, I am sure insurance companies knew what they were doing. Therefore, what this scheme amounts is in effect investors thinking they are smarter than actuaries(or willing to take a lesser payout, or some bizarre tax advantage). Let's assume one 80 year old can buy a 10million dollar policy(for simplicity we assume all premiums paid to the end of life) for say 5 million. Then investors offer 5million 100 thousand for the said policy. Person is richer 100 thousand out of this. That is investors think that the person will die sooner than the insurance company has calculated. If the investors buy sufficient number of policies, they are guaranteed a pretty steady income, but as the article shows it is not risk free.
- surlyadopter 16y agoAny way you cut it, "investing" in someone else's life insurance policy is ghoulish.
- rbanffy 16y agoYou have to really trust your investors when you are worth more dead than alive... Lots of psychos in this business. Someone will eventually consider the use of bullets to make the... payoff date more predictable.
- gte910h 16y agoYeah I agree, this is not for me. Too scary from those afraid to lose their shirt.