

Lawyer's Heirs Fight Insurers in $56 Million Policy Intrigue  - grellas
http://online.wsj.com/article/SB10001424052748704247904575240201550608376.html?mod=WSJ_hps_MIDDLEForthNews

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qq66
"Days after New York attorney Arthur Kramer died unexpectedly at age 81"

I can't really consider any 81-year-old's death to be unexpected. Which makes
me wonder why anyone was underwriting life insurance for him.

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sireat
I had a chance to look at death tables recently and the drop off is rather
dramatic for men starting at around 75 (for women it is noticable at 85 or
so).

That said, I am sure insurance companies knew what they were doing.

Therefore, what this scheme amounts is in effect investors thinking they are
smarter than actuaries(or willing to take a lesser payout, or some bizarre tax
advantage).

Let's assume one 80 year old can buy a 10million dollar policy(for simplicity
we assume all premiums paid to the end of life) for say 5 million.

Then investors offer 5million 100 thousand for the said policy. Person is
richer 100 thousand out of this. That is investors think that the person will
die sooner than the insurance company has calculated.

If the investors buy sufficient number of policies, they are guaranteed a
pretty steady income, but as the article shows it is not risk free.

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rbanffy
You have to really trust your investors when you are worth more dead than
alive...

Lots of psychos in this business. Someone will eventually consider the use of
bullets to make the... payoff date more predictable.

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gte910h
Yeah I agree, this is not for me. Too scary from those afraid to lose their
shirt.

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surlyadopter
Any way you cut it, "investing" in someone else's life insurance policy is
ghoulish.

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perlpimp
This is not really hacker news IMO, belongs more on Fark.

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tkahn6
_"From 2004 to 2008, tens of thousands of older people sought to make some
fast cash by taking out multimillion-dollar policies on their own lives and
flipping these to brokers, who resold them to investors like hedge funds and
investment banks."_

That's amazing.

And these are essentially no-risk investments. Am I understanding this
correctly?

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fr0sty
The investment is only good if the actuarial tables prove to be correct. For a
counter example see:

<http://en.wikipedia.org/wiki/Jeanne_Calment>

In 1965, aged 90 years and with no heirs, Calment signed a deal to sell her
former apartment to lawyer André-François Raffray, on a contingency contract.
Raffray, then aged 47 years, agreed to pay her a monthly sum of 2,500 francs
until she died, an agreement sometimes called a "reverse mortgage". Raffray
ended up paying Calment the equivalent of more than $180,000, which was more
than double the apartment's value. After Raffray's death from cancer at the
age of 77, in 1995, his widow continued the payments until Calment's death.

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chronomex
Calment was still alive in 1995? If my math is right, that makes her at least
130 years old.

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pwim
You are off by 10.

90 + 1995 - 1965 = 120

She died in 1997 at 122 years according to above link to wikipedia.

