Should you be worried if a hedge fund manager you have never met has an interest in seeing you dead?

[Robbien]

Should we all be worried when people start taking out life insurance policies, not to protect their families, but to sell them later at a profit?

And the biggest question of all: are the Wall Street brainboxes who brought us the sub-prime mortgage meltdown charting a similar course for the life insurance market?

Some of the finest minds in finance are, as we speak, working on new ways to chop up and repackage old life insurance policies for sale on the global markets. They are creating insurance derivatives for the speculators to play with. Goldman Sachs has already launched an index of human life expectancy on which investors can bet money.

There are too many echoes of what has happened in the mortgage market to ignore, and insurance industry players, finance experts and politicians are among those with a queasy, uneasy feeling that we might be watching the beginnings of something bad. Something that could become the big financial scandal of the next decade.

. . .

Which is why Goldwyn and Sylvia Schroeder, a couple in their seventies from Sacramento, California, have been in the national news in the US these past few weeks. The couple were targeted by an insurance agent who offered Goldwyn Schroeder $1,000 to fill out a survey about his health, but it turned out to be a legal document allowing access to their medical records. Sylvia Schroeder, meanwhile, was offered a life insurance policy. The policy would be for millions of dollars, the agent claimed, and when she passed away, the payout would go to a complete stranger. She was offered money to co-operate. "They said if they took life insurance out on me, they would give me as much as $60,000 to $120,000," she told local television.

The bewildered Schroeders – by turns scared and tempted – are among seniors caught up in a growing trend for "stranger-originated life insurance", or Stoli.

Individuals have long been able to sell their life insurance policies to so-called "life settlement" firms. The company takes on the premiums and takes the windfall on your death, in return for an upfront payment that is substantially larger than the surrender value of the policy.

http://www.independent.co.uk/news/business/analysis-and-features/you-can-bet-your-life-this-policy-will-end-in-tears-783204.html

Scary stuff.

[havocmom]

1. Wall Mart has been doing it with employees for years

Dead or alive, they exploit workers. Taking out life insurance policies without even mentioning it to employees.

[babylonsister]

2. Are you kidding me? On employees? Betting on their longevity

while denying them healthcare? :wow:

[Rincewind]

3. No

Wal-Mart is not betting on the longevity of their employees, they are betting on them dieing relatively soon. If they have life insurance policies on their employees, they cash in every time one cashes out.

[babylonsister]

5. Ergo, buying a life insurance policy and hoping/betting they die so

Wal-Mart can collect, without their knowledge? Is that even legal?

[Kokonoe]

7. Yes, the law was meant for important CEO's or such.

[peacetalksforall]

8. They are famous for hiring older people - then they insure them unknowingly? and

the others place 'investment-bets' on their death? and the money goes to Wal-mart?

How can any family even consider such a thing if they know about it.

Las Vegas betting - all SEC approved? (Is SEC correct)?

Unbelievable.

[havocmom]

9. Doesn't give them a lot of incentive for creating safe, healthy work areas does it?

Employees die, Walmart get $$. Employees who manage to get insured, then get hurt or sick have been sued for some of the insurance money THEY got for illness or injury.

Yep, insurance is the new sub-prime disaster in the making. Corporations using insurance as money making devices. Gee, how ya think THAT's gonna affect premiums? No wonder the insurance industry is writting checks for pols who want to make insurance mandatory, even for people who can't afford it. They need a big pool of workers to, once again, shoulder the load corporations are scheming to get.

[fed-up]

12. proof that even wal-Mart knows working there is bad for its employees health nt

[flashl]

27. The employer wins dead or alive.

Companies Profit on Workers' Deaths Through 'Dead Peasants' Insurance
The Wall Street Journal ^ | Friday. April 19, 2002 | ELLEN E. SCHULTZ and THEO FRANCIS

The coverage is called broad-based insurance, or corporate-owned life insurance, usually shortened to COLI.

COLI policies yield tax-free income as their investment value rises, just like conventional whole life policies. Companies also borrow against the policies to raise cash.

The practice is as widespread as it is little-known. Millions of current and former workers at hundreds of large companies are thus worth a great deal to their employers dead, as well as alive, yielding billions of dollars in tax breaks over the years, as well as a steady stream of tax-free death benefits.

Nestle USA has policies covering 18,000 workers, Pitney Bowes Inc. has policies covering 23,000, and Procter & Gamble Co. has 15,000 covered workers.

[Robbien]

4. But then do they sell the policies to wall streeters who then bet on it?

A bunch of stockholders making bets on whether you will die.

[kineneb]

20. called rudely enough: dead peasant insurance

betting on the peasants to die early. How...nasty. Scum.

[LongTomH]

21. This just confirms it! Wal-Mart is evil!

nfm :grr: :grr: :grr: :grr: :grr: :grr: :grr: :grr: :grr:

[arikara]

25. I remember reading somewhere

that not only do they take out insurance on their low paid employees but that they keep the policies going even after the person no longer works there and that walmart makes a bundle by doing so.

[Rabrrrrrr]

34. Lots of companies take out insurance on their employees -

however, WalMart is one of the few that was actually doing it without telling the employees.

Generally, companies take out life insurance policies on their top execs, not the worker drones. And they do it with the exec's consent, not behind their backs.

[mrreowwr_kittty]

6. I thought this was illegal.

You have to have an insurable interest on someone (family member or employer) to own a life insurance policy on them.

[Robbien]

10. The scam is, YOU take out the life insurance on you and then sell it

to trusts who then puts it up on the market for wall street hedge fund bets.

[mrreowwr_kittty]

11. That is freaking scary.

It was bad enough when we were talking about peoples' homes. Now we're talking about their lives. :scared:

[Robbien]

14. What gets even scarier is that there will be predators who will

be out there running schemes fooling people into these kind of arrangements without the people even knowing what is going on. Just as they did with the mortgages.

But this time they will mainly be preying on the aged.

[pitohui]

33. i see that but i'm not clear on how it would be allowed

i can't just buy life insurance and assign it to anyone i like, i have to prove that the beneficiary has an insurable interest -- my husband, my child, my parents, my business partners, etc

in my state i can't just buy life insurance and then sell it to any random, they ask who the beneficiary is right away and examine to see if that person has an insurable interest

or at least they used to, has it changed? or is this different in different states

[Robbien]

35. It is all about the trust accounts

You make the beneficiary a trust account at a bank/investment firm. Trust accounts are acceptable beneficiaries. Then you assign the trust over to the bank/investment firm.

[pitohui]

32. the same is true in my state (louisiana)

you have to have an insurable interest and you'd better be able to prove it -- 2 examples

before we married, to get life insurance on himself payable to me, my then-bf had to show that we owned a house together (it was not yet paid off when he bought the insurance, not sure if he'd have been allowed to purchase it if it had been -- but the mortgage was considered proof of an insurable financial interest)

a friend's cousin was girlfriend to a married man for several decades, when he died, she couldn't get the insurance and somehow the family also cut her out of her share of the will, this wasn't that long ago either, maybe a year or so before katrina

[NYC]

13. People ought to recommend this thread.

That way we all see it coming.

[underpants]

15. Rec'd- sleazeball tactics are now taught or at least fostered in MBA courses

It's all about the "ideas" :eyes:

[babylonsister]

16. Kick, recommend, needs some attention. It's important. nt

[girl gone mad]

17. Said it before and I'll say it again..

Reaganomics and Bush tax cut policy have put too much money in the hands of too few, who keep use it to pursue increasingly ridiculous speculative bubbles, in part because they expect limited downside with government bailouts.

[HCE SuiGeneris]

18. I just found a new way to market myself to employers!

damn, this is some scary stuff

[mojowork_n]

19. Is New Zealand still welcoming emigrants?

Rest assured, STOLI's sound horrible enough, but there are so many varieties of derivatives, chasing too few actual assets, that the whole house of cards will collapse, long before they've become more common.

[Berry Cool]

22. Hmmm.

So George Bailey really IS worth more dead than he is alive.

If I were him, I'd get out of Bedford Falls toot sweet before Mr. Potter found me.

[rucky]

23. Wouldn't they want you to outlive your policy? n/t

[Robbien]

31. Only those who are betting long, but beware of those who are betting short

and pray they don't very badly need to win.

[NashVegas]

24. And How Much Does This Drive Up Insurance Rates?

For the rest of us?

[The Backlash Cometh]

26. So, they get access to your medical records AND buy a life insurance

policy on you? Isn't that a form of insider trading?

[flashl]

28. Nationally, its dead peasant or janitor. In Texas, its dead teacher.

Dec. 05, 2003
Ex-senator proposes how retirement system can profit from death

Associated Press

AUSTIN - A plan by former U.S. Sen. Phil Gramm to bail out Texas' teacher pension fund partly through retirees' deaths is criticized by some state pension administrators and officials of educators' unions who want to know how much of the money would go into the retirement program.

The plan, backed by Republican Gov. Rick Perry, is similar to so-called "dead peasant" policies that have created legal and public-relations headaches in the private sector.

Gramm, now vice chairman of UBS Investment Bank in New York, has proposed to Texas officials that the state buy life insurance policies and annuities on thousands of retired teachers and cash in on them to close a $700 million funding gap. The plan was set in motion after a recent meeting between Gramm and Perry at the governor's mansion. Retirees would be told they were being insured, with the money going to the agency.

---

Companies Profit on Workers' Deaths Through 'Dead Peasants' Insurance
The Wall Street Journal ^ | Friday. April 19, 2002 | ELLEN E. SCHULTZ and THEO FRANCIS

The coverage is called broad-based insurance, or corporate-owned life insurance, usually shortened to COLI.

COLI policies yield tax-free income as their investment value rises, just like conventional whole life policies. Companies also borrow against the policies to raise cash.

The practice is as widespread as it is little-known. Millions of current and former workers at hundreds of large companies are thus worth a great deal to their employers dead, as well as alive, yielding billions of dollars in tax breaks over the years, as well as a steady stream of tax-free death benefits.

Nestle USA has policies covering 18,000 workers, Pitney Bowes Inc. has policies covering 23,000, and Procter & Gamble Co. has 15,000 covered workers.

[blondeatlast]

29. Graverobbing ghouls. Why isn't this in the WSJ or NYT?

Virtually only on the 'nets--a source the Schroeders and their age group are likely to be pretty unfamiliar with.

Warn your parents and grandparents and the nice lady down the street and the kindly gentleman at the library and so on...

:scared:

[sarcasmo]

30. The new Get rich quick Scam, only you wind up Dead.

Kick and Bookmarked.