A new idea is floating around Wall Street. It involves investment companies buying your life insurance early and cashing in on it when you die. Can you say reverse mortgage? Yeah, like that.
Let’s say you have a $250,000 life insurance policy. They would give you $75,000 immediately in cash for your policy. When you die, they get the $250,000. If you have a million dollar policy, they’d give you, perhaps, $400,000 and collect a million when you’re safely in the box. Interesting concept.
The terminally sick would be especially targeted since they’ll be dead sooner than later and probably need the money right now to pay for exploding expenses involved in the long, dark, six-foot slide.
It get’s more convoluted. Once they make the deal with you and thousands of other people near the exit, they’ll package these deals into some type of fund or an auction rate security-ish instrument and sell them as investments. If such a deal sounds like the derivitaves that got our economy into trouble to begin with, you win the prize.
Life insurance companies will clearly have a say-so in this latest gamble since the person they are insuring and they company that owns the policy would be two different intities. But if people with MBA’s can find defendable ways to give a $750,000 mortgage to a person making $17,000 a year for a house that is probably worth $230,000, then I guess investing in death doesn’t seem so farfetched.
