Tuesday, October 6, 2009
Let's Kill Grandma
"Life settlements generally involve long-standing 'permanent' universal life and variable universal life insurance. These are the sorts of policies that were sold, not bought. ... As a dejected policy owner, you have three choices: You can pocket the meager cash-out value offered by the insurer. You can keep pouring money into the policy, maintaining the death benefit for your heirs. Or you can sell the policy to a stranger. ... The stranger buying you out is hoping you get flattened by a train, preferably the day after the deal closes. ... Downsides: Life settlements are labor-intensive, multimonth processes from which sellers usually emerge with a lot less than they would get in an efficient, transparent market. Sometimes they get hit with hefty tax bills. ... The process of receiving a life settlement is so complex and perilous, and it's so easy for policyholders to leave a lot of money on the table, that it's best to hire competent help. Bypass the legions of agents trolling the Internet and find an expert through a trusted attorney or other estate planning specialist. ... It's best to pay your helper a flat or hourly fee. Compensate him purely for doing a deal and you'll increase the chance it will be a bad one. ... Investors in life settlements are typically seeking 14% to 20% annual returns. To help them investors have traditionally followed the ghoulish practice of cherry-picking sellers with short life expectancies", William Barrett at Forbes, 5 October 2009.
No problem for the investor. To assure good life settlement returns, kill grandma. This looks like a wonderful opportunity for the mob.