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Death Bonds: Watch Big Banks Make A Killing (Literally)

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wndycty Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-22-09 09:33 PM
Original message
Death Bonds: Watch Big Banks Make A Killing (Literally)
Death Bonds: Watch Big Banks Make A Killing (Literally)
By Sally Kohn
Senior strategist with the Center for Community Change
Posted: September 22, 2009 05:48 PM

You'd think some profiteering schemes are too sick even for Wall Street. But think again.

Wall Street is hoping that health care reform fails so not only will insurance company profits and salaries rise but big banks can get in on the business. Goldman Sachs and other bailed out banks are putting big bucks into death bonds. When their last sub-prime mortgage scam went bust, we lost our houses. This time, we'll lose our lives.

If insurance companies get their way and the quality of American health care continues to decline, the value of "death bonds" --- life insurance policies bought from the sick and elderly that increase in value the sooner the policyholders die --- will skyrocket. It's not sick enough private health insurance CEOs are making millions by putting profits before patients, cutting care and denying claims left and right. Now Wall Street wants in on the scam.

Check out this video where I take to Wall Street to ask executives and average folks what they think about this latest gruesome scheme from the big banks.

http://www.youtube.com/watch?v=6-WfAUP8fSY
-snip-

Read more at: http://www.huffingtonpost.com/sally-kohn/death-bonds-ho...
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Fridays Child Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-22-09 09:44 PM
Response to Original message
1. k&r
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Travis_0004 Donating Member (417 posts) Send PM | Profile | Ignore Tue Sep-22-09 11:19 PM
Response to Original message
2. I'll hold judgement for now
Edited on Tue Sep-22-09 11:24 PM by Travis_0004
The whole point of life insurance is if you die, the insuring company looses money, since it pays out a premium.
If you live, the company makes money since it does not pay out a premium.

There are things such as guaranteed annuities, which pay out a set amount of money for the rest of your life, which can be a good thing for some people.

With these, the longer you live, the more money they loose.

I see nothing wrong with a company offering a guaranteed annuity.
I see nothing wrong with buying or selling them as needed to keep a company stable.
One one hand they make money if somebody dies, but on another hand if somebody lives to be 120 they will have a guaranteed income stream for life which they wouldn't have had otherwise.

That's all insurance is, you are taking a risk. Some people win with insurance, some loose, but overall it evens out, and if you don't like it, then don't buy it (talking about annuities, not health insurance).

Keep in mind, the only reason Wall Street has these to sell is because the individual people involved are selling them to Wall street, because they think its in their best interest, and for some of them, it probably is.

This is slightly different than annuities, but the concept is similar. For some people, they need the money now, and without dependents, a life insurance policy doesn't do you a lot of good when you are dead.
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earth mom Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-23-09 12:04 AM
Response to Reply #2
3. WTF?! Withhold judgement? Who do you work for anyway?
:wtf:

FYI-This crap should be illegal.

The only people who should be allowed benefits upon death is immediate family.

Anything else is predatory and disgusting. :puke:
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RB TexLa Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-23-09 12:25 AM
Response to Original message
4. So you'd rather when someone can no longer afford their life insurance they lose it?
they get a pay out for it and the investors pay the premiums. It is a sure bet, people die. The return is factored by how long people live but they have good actuaries, and there is competition for life settlements.

If you take away life settlements the cash value in most insurance policies is not that good of a deal.
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Travis_0004 Donating Member (417 posts) Send PM | Profile | Ignore Wed Sep-23-09 12:48 AM
Response to Reply #4
5. That's not what I said
Edited on Wed Sep-23-09 12:48 AM by Travis_0004
Keep in mind that although some people can no longer afford their life insurance policy, there are others that no longer NEED their life insurance policy.

If you don't have a spouse for whatever reason, and your kids are successful on their own, (yet are not wealthy enough to help you out), then there can be good reasons to cash out a life insurance policy. I didn't say its for everybody, but it can be good for a select group of people.

Also, don't try to take a moral high ground saying you can't profit off of peoples death, with funerals costing 8,000 or more obviously a lot of people are making money off them.

If a business is selling you something, its obvious they are trying to make a profit of you, but if it benefits you, then you take them up on their offer.

Would you rather have us eliminate guaranteed annuities, life insurance policies, and funeral directors?
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RB TexLa Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-23-09 07:08 AM
Response to Reply #5
6. I don't see where I said you said anything or replied to you about your post
I think it is fine that people in the businesses you mentioned make a profit for their work. I do not know how you get any what you said out of my post saying that this is a good way to provide a payment for people who can no longer afford their life insurance.
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Phoebe Loosinhouse Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-23-09 07:20 AM
Response to Original message
7. This will eventually kill off the life insurers , leave a lot of people uncovered & holding the bag
Part of what keeps the entire industry afloat is that the underwriting takes into account that not all policies issued will be paid out. There is a natural attrition as people drop their policies for a multiple of reasons. If every policy issued goes to maturity and is paid out, it is a given that the entire industry will collapse due to the "death bonds". This is completely predictable and foreseeable, just the way the mortgage crisis was predictable and foreseeable.

There will be a point when the insurance industry collapse due to the death sharking of these immoral financial perverts, and lo and behold, a lot of widows and orphans will be left with nothing. We'll all run around screaming and the government will bail out the life insurance industry because it is "too big to fail".

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ChairmanAgnostic Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-23-09 07:22 AM
Response to Original message
8. Wrong. Watch banks get killed:
http://livinglies.wordpress.com/2009/09/16/kansas-supre... /

60,000,000 securitized mortgages just went out the window, kind of like a banker attempting to fly without wings in 1929.
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