Randomness

[Distracted]

I don't think I'd invest in it, and it is rather morbid, but I don't see anything wrong with a relatively able-bodied gramma deciding that she wants cash from her life insurance now instead of leaving it to her ungrateful grandchildren. And the company that fronts her the cash deserves to make a profit for the service it provides.

I'm no financier, but the way I understand it, the idea is sort of like a fundraiser raffle with the eventual life insurance benefits as a prize. The number of tickets sold (number of investors) determines the profit margin. It's actually a clever way of maximizing profits that allows the company to give the insured MORE of their life insurance money than they would be able to give them otherwise and still make a profit.

[Silverbullet]

Warpgirl, there is a whole book of people with my name. First, middle and last. You are lucky that there might only be one around with your name.

MONEY, yells out loud. all sorts of Monkey's out there scheming on how to seperate you from the few bucks you might have. If they do it right it is barely legal.

Best to be poor no one wants poverty.
SB

[Kotik]

[WarpGirl]

Well that was certainly a mature reaction! He should have looked on the bright side, he didn't marry the foolish little tart!

Now for some cool, yet slightly disturbing (to me) randomness... http://now.msn.com/now/0426-real-life-phaser.aspx

Let's hope nobody gets the bright idea to use this on a living thing!

[Alelou]

I don't think I'd invest in it, and it is rather morbid, but I don't see anything wrong with a relatively able-bodied gramma deciding that she wants cash from her life insurance now instead of leaving it to her ungrateful grandchildren. And the company that fronts her the cash deserves to make a profit for the service it provides.

I'm no financier, but the way I understand it, the idea is sort of like a fundraiser raffle with the eventual life insurance benefits as a prize. The number of tickets sold (number of investors) determines the profit margin. It's actually a clever way of maximizing profits that allows the company to give the insured MORE of their life insurance money than they would be able to give them otherwise and still make a profit.

You have a point. However, this practice is probably going to drive up the cost of everyone's life insurance ... because now the insurance company can't count on a certain number of people dropping out of the pool, which messes up their actuarial math. Also, your insurance company might just go bankrupt because of this, and there's no federal guarantee on your insurance investments. So ... yeah, it's a fair way for the geniuses to make themselves more money, and it does help Grandma out, but it's going to have reverberations throughout the economy sooner or later.

[Kotik]

I don't think I'd invest in it, and it is rather morbid, but I don't see anything wrong with a relatively able-bodied gramma deciding that she wants cash from her life insurance now instead of leaving it to her ungrateful grandchildren. And the company that fronts her the cash deserves to make a profit for the service it provides.

I'm no financier, but the way I understand it, the idea is sort of like a fundraiser raffle with the eventual life insurance benefits as a prize. The number of tickets sold (number of investors) determines the profit margin. It's actually a clever way of maximizing profits that allows the company to give the insured MORE of their life insurance money than they would be able to give them otherwise and still make a profit.

The problem is, that the people who's life expectancy the bets are placed on do not participate in this fund. As far as I understand it, it works something like this:

Granny is desperate for cash, so she is payed some "compensation" (read: quick cash) and in return the bank nicks Granny's life insurance policy, so the payout will go into the fund. The bank starts speculating with Granny's former life insurance and the speculants hope for her quick demise because that will improve revenue. All that granny gets out of it is some quick cash that is a fraction of what her payout would have been and a bunch of greedy speculants, hoping that she's kick the bucket rather earlier than later. That's just sick. It's only a matter of time until the speculants try to improve the odds and we'll have a lot of grannys and granpas clumsily dropping their hair dryer into the bathtub.

[Transwarp]

However, this practice is probably going to drive up the cost of everyone's life insurance

I don't see how it would affect insurance rates at all. The policy doesn't change, nor does the payout when I die.

Let's say I have life insurance. Let's say it's a $100,000 policy paid to my designated beneficiaries upon my death. You give me some money NOW (say $30,000) that I can use *before* I die, and in exchange I make you the beneficiary so you can get the full $100K after I kick the bucket. Obviously, the sooner I die, the better an investment it was for you, but it changes nothing with regard to the insurance company's risks or their actuarial tables.

Why shouldn't I be able to make such a transaction? I see nothing inherently wrong with it. If granny truly is strapped for cash, then would you rather she eat dogfood and live in a cardboard box then be able to cash in her insurance policy? It seems like it should be legit as long as no one is coerced into the transaction.

It's only a matter of time until the speculants try to improve the odds and we'll have a lot of grannys and granpas clumsily dropping their hair dryer into the bathtub.

That seems like a stretch. The insurance companies might have something to say if they suspected their clients are being murdered for the insurance money. And if German finacial companies have the wherewithal to get away with murder for financial gain, why wouldn't they just rob banks instead? It seems like that would be easier and more lucrative.

[Kotik]

That seems like a stretch. The insurance companies might have something to say if they suspected their clients are being murdered for the insurance money. And if German finacial companies have the wherewithal to get away with murder for financial gain, why wouldn't they just rob banks instead? It seems like that would be easier and more lucrative.

You'll hardly find a german insurance company that isn't partly owned by some bank or other. Of course it is a tad exaggerated, but I still think that a "financial product" that thrives on peoples death is despicably to say the least. The story was unearthed only two days ago, but already the Deutsche Bank is facing their public relations equivalent of Chernobyl. People, who invested in those death-bets (having been left in the dark about the real going-ons) are withdrawing by the boat-loads and the bank faces damages in three-digit millions. Serves them right

[Alelou]

The actuarial math that insurance companies use to decide how much to charge for insurance and still make money without losing money is based on certain factors which include life expectancy and the reality that a certain, rather significant number of people are going to end up losing their policies because they can't keep making the payments. For the insurance companies, that's free money to set against their losses when they pay out. That second factor changes tremendously if a company is going to make those payments as an investment that it can easily afford. Suddenly nobody is dropping their insurance. The companies are under contract with existing customers, so they can't suddenly hike their rates on those people. Those that are not well enough diversified or secondarily-insured (for example, with AIG, which went bankrupt in the last bubble and is still on government life support) may not survive.

There's no particular need for anyone to start murdering anyone to make money off this -- especially the people who package and market and repackage and remarket the stuff, basically creating big bucks for themselves out of nothing. (Sound familiar?)

When/if this ends up running insurance companies out of business, someone's going to be left holding a bunch of worthless investments, but if they are banks they no doubt they assume (probably safely) that the government will decide they are too big to fail and rescue them again.

I think the practice should be regulated in such a way as to make sure the people who initiate these transactions are fully explaining the high risk, and they should all have to contribute NOW to a fund to rescue them when it all falls apart.

Also, I wouldn't recommend that any individuals invest in a whole life insurance policy or annuity with an insurance company with a lot of exposure in these funds (and I don't know if there's any way for those companies to even know how exposed they are).

[Cogito]

Talking of life insurance, ...

it turns out that I suffer from vertigo.

El Camino del Ray

[Asso]

WOW!

[Alelou]

Adios mio.

[Kotik]

As was so adeptly written in the comments: The path to Chuck Noris' house

Edit: What in the name of all that's holy...

Today a Berlin regional court ruled that public strangling to death of dog puppies as part of a public art performance is unlawful. O RLY? How's that for a surprise?? The "artist", who challenged the courts ruling, explained that the performance "Death as a Metamorphosis", during which, after a 15 minute meditation, two newborn dog puppies were planned to be strangled to death using cable ties, followed "traditional Thai art forms". O RLY ?? Well, they usually eat them afterwards, chuckles!!

I'm starting to wonder if these days there are any news coming out of Germany that won't make us look like a stark raving mad bunch of degenerated psychopaths I wanna new home country!

English language discussion of the "art performance"

[Silverbullet]

Kotik, Germany is one of the most visually beautiful countries in Europe. It was once the center of Science and Higher Education. German Universitites were sought after for the children of foreigners. the Parks and Gardens of Germany are second to none. (The English Gardens In Munich where one can get a liter stein of great Beer in a wonderful setting.).

Germany has a lot going for itself. Don't let a few soreheads ruin that for you.

SB

[putaro]

I wanna new home country!

Any sane countries out there? I'd say at best you'll get different crazy.