ST Alpha - "Do you know the way drug dealers are often referenced as dealers of death?" (Reading a Post)

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Do you know the way drug dealers are often referenced as dealers of death?

Posted by Loyola Sep 6 '09, 14:16

"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 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."

Translation; if alot of people die earlier than expected, well, that just means even more profit.

Moral Hazard (www.nytimes.com)

Responses:

There may be less to this than meets the eye - Brian Sep 6, 14:28 3
- non-Transformers? Gobots? -- nm - Beaker Sep 6, 14:58
- I don't think there is much to this... a widespread adoption would kill every life insurance company - Stewie Sep 6, 14:40 1
  - Well, we managed to wipe out mortgage companies, auto manufacturers, and banks. ;-) -- nm - CrankYanker Sep 6, 14:44
I would think that by securitizing them the investors would know less about the actual individuals than the current investors do now IE: reverse.. - zeitgeist Sep 6, 14:22 2
- Not if they take the time to read the individual policies in each pool..... heh, as if the mortgage investors even did that. -- nm - CrankYanker Sep 6, 14:24 1
  - well the mortgage brokers *said* they were AA and so did the auditors they hired to say they were AA so they must be AA right? -- nm - zeitgeist Sep 6, 14:57
I work for a life insurance company and we already classify this as fraud -- nm - Stewie Sep 6, 14:22 6
- But you have no jurisdiction over it, right? -- nm - CrankYanker Sep 6, 14:26 5
  - We can deny coverage based on the beneficiary not having an insurable interest - Stewie Sep 6, 14:31 4
    - I always figured a drug rehab place that specialized in the down and out street junkie, crack hoes etc could support themselves by having their resi.. - zeitgeist Sep 6, 14:55 1
      - ...then there is that whole physical that we require on every applicant - Stewie Sep 6, 14:57
    - Thanks, that's good to know. -- nm - Loyola Sep 6, 14:34
    - ah, interesting. -- nm - CrankYanker Sep 6, 14:33
Viaticals have been around a long time -- (link) - TWuG Sep 6, 14:19 3
- Except in this instance, the prices on these securitized will explode when events like a pandemic break (swine flu). Effectively people will be - Loyola Sep 6, 14:23 2
  - ... and conspiring to worsen the deathcount -- nm - Beryllium Sep 6, 14:26 1
    - It does bring up the whole notion of moral hazard doesn't it. -- nm - Loyola Sep 6, 14:28
Because they didn't learn their lesson a year ago. -- nm - Reagen Sep 6, 14:18 1
- It's obscene. Same as it ever was. -- nm - Loyola Sep 6, 14:20

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Do you know the way drug dealers are often referenced as dealers of death?

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