#1202 Wall Street Undertaking

I’m all for Wall Street coming up with new and interesting ways to make us money. Can you use “interesting” as a word to describe the process of a 401k plummeting to the bottom of a roller coaster? And what fun we had with that whole innovative credit default swap shell game.
So it was with a sense of impending doom that I read about the latest hedge fund manager creation. It’s called a Life Partner Agreement. Here’s the principle. An investor approaches a retiree who has a life insurance policy. The investor offers the retiree an upfront chunk of cash and the promise to continue paying the premiums on the policy. The retiree gets money now. The investor gets the policy proceeds when the retiree dies.
If you are a smaller investor, you can join a fund, like Life Partner Holdings, and for a mere $50,000 buy into an investment pool.
The ghoul pool. Because it’s pretty spooky...
“High Net Worth” investors buying up the proceeds of life insurance from people on the edge—what a lovely undertaking. Are these the same retirees whose nest egg was just wiped out by the same Wall Street double-dealers? Since they can’t get by on their cat food money anymore, they have to sell out their death benefit.
Where’s the regulation? Because this violates a cardinal principle of life insurance—the principle of insurable interest. Someone can’t buy a life insurance policy on you unless they are your relative, or your boss and you’re a valuable employee. That’s so they won’t turn around as soon as the policy is in place and kill you.
So what happens when the Wall Street Underwriter undertakers decide paying your premiums is cutting into their bottom line, your earning ratio is about to go upside down, and you’ve outlived your profit potential?
Time for the Wall Street Death Squads.
Where’s Sarah Palin when we need her?
They wiped out your pension when they did all the Wall Street raiding in the eighties. They wiped out your 401k in the economic cratering of the oughts. Now they’re buying your live insurance in hopes you’ll die while you can still turn a profit.
Or else.
America, ya gotta love it.