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News & ArtsSunday, September 6, 2009
Money Betting on Death
Posted by Charles Mudede on Sun, Sep 6, 2009 at 12:14 PM
Capitalism enters the underworld:
(NYT) 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 sooner you die, the bigger the profit. Even the bones of saints can not resist this kind of dark power. A power the gives death more money, and life much less. No wonder the right are against health care reform; life is a poor investment,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.
2
This is called viatication. I remember them doing it when AIDS first started killing off folks. It fell out of favor when anti-virals were invented.
3
I have a friend who was expected to die of AIDS back in the 90's. He sold his life insurance at peak dollar in he months before the first antivirals appeared. To this day, some employee of an investment house calls him once a year and inquires about his health.
4
Awesome, now we have a mortality bubble! All we have to do to pop this one is cure cancer! Let's get on this, science!
5
These are side bets for anti-healthcare reform activists. Something has to be motivating all those nut jobs.
6
Viatical settlements give folks access to money they wouldn't otherwise be able to use or borrow against. This is a pretty cool thing if you're sitting on a $500k life insurance policy and find out you'll be dead in a year.
Yeah, someone's mortality is involved - gasp, we're gonna die, donttalkaboutit - but what do you think life insurance is?
Yeah, someone's mortality is involved - gasp, we're gonna die, donttalkaboutit - but what do you think life insurance is?
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