So you’re a 73-year old man in need of a little (or a lot of) cash. You get a brilliant idea to buy life insurance valued at $10 million and sell it to someone who will pay the premiums and get the payoff. Then you do it again with a $5 mil policy (which surprisingly nets you more money).
But now you’ve got a problem. You’ve got so much life insurance on you that nobody wants to insure you. Plus, there’s some legal sketchiness about buying life insurance on an old person to profit from it when he dies (though I don’t think it’s illegal-correct me if I’m wrong).
Mr. King isn’t very happy. Something about not getting enough money and not being eligible for more life insurance and whatnot. His age and health history may have something to do with it, IMHO, but I really don’t care too much about him. I’ve never even watched his show.
What’s worse, though not surprising, is that this is apparently a thriving market. According to the Post:
…industry analysts suggest that if the pace of life insurance policy re-sales over the past several years is any indication, the $30 billion that traded hands last year could easily grow to more than $150 billion over the next decade.
“The lure of easy money is seducing participants into the secondary market for life insurance and putting life insurers in compromising positions,” Fitch Ratings said in a special report in September. “The flow of capital to date and the potential for this market have created a gold rush atmosphere, increasing risks for all involved.”
Why would anyone feel safe doing this? It’s like making yourself the subject of a death bet. Wouldn’t someone have a big interest in killing you? The sooner Mr. King dies, the sooner they can stop making payments.
From the Post again:
To remove overt financial incentives for a third party to take out a policy on a person and then see him dead, English courts mandated that individuals have a personal or economic interest in a person to buy insurance on him.
I suppose you could still sell your insurance in England, but at least no one can take it out behind your back like Walmart did.
Maybe this is finally a way of getting back at the insurance companies for profiting from our laziness and fear (though some insurance makes sense to me…just not many warrenties).
Somebody’s got to ask the question-will there be a life insurance bubble? And perhaps a subprime life insurance crisis? People found “free” money in the internet, their houses, now it’s their lives…one can only wonder what’ll be next.
P.S. If nothing else, insurance companies may raise rates on us ordinary folk to handle the payouts…