Wall Street bankers are at it again: They will bet your life on 'life settlements'

Posted Sep 8th 2009 6:30PM by Connie Madon
Filed under: Deals, Products and Services, Launches, Management, Industry, Marketing and Advertising, Market Matters, Money and Finance Today, Personal Finance

Warning! Take a nausea pill before reading this! How do bankers intend to get $500 billion dollars?

Was it a mistake to bail out Wall Street? Did you ever try and stop a cat from scratching on your sofa? The cat will wait you out and when you are not looking, it will start all over again. Wall Street is like that cat. They waited out the bailout last year and now are at it again with a new scheme called "life settlements."

What are "life settlements?" They are life insurance policies from elderly people who sell them for cash. For example, a $1million dollar policy could be sold for $400,000, which is more than the cash surrender value.

Bankers are already gearing up for this new scheme.

They plan to buy policies from ill people with such diseases as lung cancer, heart disease, breast cancer, diabetes and Alzheimer's. They are not interested in healthy people. Then of course you already know the next step.The bankers will then package them like CLOs and CDOs and sell the packages to investors and pension funds. These investors will then profit when the person dies and they collect the face value of the policy.Goldman Sachs (NYSE GS) has already developed an index for these securities.

Does this sound familiar? Of course. This craziness led to our financial meltdown. But you say: "This time it will be different." Oh yes, suppose they find a cure for Alzheimer's disease. Then the market crashes and you have another bailout.

Do you think history will repeat itself?

Tags: bankers new scheme, life settlements, LifeSettlements

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Reader Comments (Page 2 of 2)

9-09-2009 @ 8:24PM

MyJourneytoMillions.com said...

"Anyway, until the "insurable interest" law is changed, this idea won't fly, unless our president issues yet another edict and it passes without the usual scrutiny used in the past.......it's like a free for all for the Obama team, isn't it?"

I am not an obama fan but you sound like an idiot. Insurance interest only applies at the creation of the policy, and life settlements have been around for decades.

http://www.myjourneytomillions.com

9-09-2009 @ 5:08PM

amoozed said...

" a bank is more dangerous than a standing army" Thomas Jefferson

9-09-2009 @ 5:17PM

Mike said...

Connie
The only policies they buy are where death is certain in 2 years or less. These people have their own doctors that investigate the policy holder. If you buy policies of people that are in the last stages of liver cancer for example, a few might live longer than expected but as a whole the majority will die on time so to speak. There is no downside except for the return on the investment because we are all going to die. I have cancer and when I get nearer the end I would consider selling my policy at a discount so I could live it up my last year on earth.

9-09-2009 @ 5:30PM

Greg Brooks said...

The best way to avoid complication is to just not do it. If you die in a way deemed not acceptable, then, the money would have been better off placed in the following list:
CD
Money Market
Bonds
Stocks
Annuity - I inclulded you Insurance folks after all
Under the mattress

To name a few!

9-09-2009 @ 5:35PM

Michial said...

It is only profitable if the people die withing the estimated time frame. My step father was uninsurble when he married my mom (which means they expected him to die within the next five to seven years). Twenty six years later (8 years beyond the life expectancy of a healthy person when they were married) he died.

Right now they say they only buy policies from sick people but if it is popular and they don't have enough sick people they will stat adding some not so sick. Some groups who market this stuff to investors already do that. Everyone dies, right?

9-09-2009 @ 6:16PM

rjaelectrical said...

and if you are DUMB ENOUGH TO PURCHASE THIS GARBAGE LIKE THE 600,000.00 DOLLAR HOUSE YOU COULDNT AFFORD THEN YOU DESERVE TO GET WIPED OUT AGAIN. YOU BUNCH OF FOOLS

9-09-2009 @ 7:11PM

luette said...

they have managed to take all our money while we are alive, does this surprise anyone?
All the government handouts, and can you get a loan? of course not.....pond scum