On May 23, 10:10*am, beliav...[at]aol.com wrote:
- quote -

I'm all for providing secondary markets and liquidity. I also believe
that most people "get what they got comin' to 'em". But the viatical
industry used outright lies, deception, and fraud to trick both
investors and insurance policyholders.

- quote -

in a billion-dollar industry rife with fraud and unregulated by the
federal government or, until recently, most states. In fact,
corruption in the viaticals industry was so widespread in the mid- to
late-1990s, federal law enforcement officials formed a task force to
combat it. In the last two years alone, federal and state authorities
have issued 78 indictments, 57 of which resulted in convictions.

Or from the AARP website:
http://www.aarp.org/money/credit_deb...Viaticals.html

Even the National Association of Insurance Commissioners warns
potnetial policy-sellers:
http://www.naic.org/consumer_life_viaticals_seller.htm

Did I forget to mention that almost all policies, including term
(which has no cash value), are now issued with an "accelerated benefit
rider" (it's free). The rider allows for up to 50% of the face value
to be withdrawn prior to death in the event that the insured is
declared terminally ill by a licensed physician. The remaining 50% is
paid to the beneficiaries as intended.

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On May 23, 9:41*am, kastnna <kast...[at]auburnalum.org> wrote:
- quote -

The "abusers" were willing to pay more for the policies than the life
insurance companies were (the "cash value"), or the insureds would not
have sold their policies to them. Unless you have some evidence of
misrepresentation or fraud, I think you are smearing people.

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On May 21, 6:47*pm, "Coffee's For Closers" <Usenet2...[at]THE-DOMAIN-
IN.SIG> wrote:
- quote -

Yes there are, but I wouldn't be too worried about them. They are
still making a hefty profit. Most AIDS victims are very young, so the
premium payments are low. Furthermore, most of the terminal patients
were in such dire financial straits that they were paid only a
fraction of the fair market value of their policies.

The abusers who too advantage of these terminally ill patients are
definitely seeing lower returns than expected, but they're probably
still making more than the average investor.

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In article <0d3v24tnas559tfuh8ime592u8blchkav8[at]4ax.com> ,
post[at]classtech.com says...
- quote -


- quote -


I seem to recall that happening about ten years ago. People with
AIDs were getting these kind of loans. The idea was that, death
was pretty much guaranteed within a few years. Then, advances in
medications enabled some of them physically improve, and keep
living on and on. Especially since so many of them were
relatively young, and may have been in decent health before the
AIDS symptoms started.

I wonder if there are investors out there, still waiting.


--
Get Credit Where Credit Is Due
http://www.cardreport.com/
Credit Tools, Reference, and Forum

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On May 17, 5:57*pm, beliav...[at]aol.com wrote:
- quote -

The main players in the life settlement industry will only sell
policies to institutions, not individuals (to minimize criminal
motivations, of course). You would likely need to find one such
institution to be able to invest in the industry. Some hedge funds
also invest in LS. For the record, I have never heard of the returns
being as high as you cite. Most institutions target 10-12% return.

The Smartmoney example is an extreme, if not unheard of, one. The
things that make a policy a good settlement candidate do not align
with the example.
1. Increasing premiums due to falling dividend crediting rates and the
inability to afford premiums as one ages are two key motivators for
those looking to sell a policy. "Assuming no further premium payments"
is a bad assumption to make.
2. A policy is a good settlement candidate if there is a large
variance between the death benefit and cash surrender value. If a $1M
policy has a $900k cash surrender value, there's no "wiggle room" to
negotiate the settlement. You need a sizable gap. How does one get
that? Well, they either a) have a recently issued policy or b) have
severely underfunded the policy. In either case the premium
requirements to maintain the policy are significant. Think of it as
trying to begin saving for retirement at age 75. It's just too late in
the game, to not have a substantial base.
3. The insured needs to have had a marked decline in health since
policy issuance. That's how life settlement companies make their
money. The insurance company prices a policy based on life expectancy.
But once the policy is issued, the insured's life expectancy can
change and there is nothing the insurance carrier can do about it. A
life settlement company, on the other hand, will re-underwrite the
insured and determine an accurate life expectancy. They then profit on
the spread between the two (the insurance company expects to collect
premiums for X years, but the settlement company expects to pay
premiums less than X years). So now we're not only looking for a newly
issued policy, but the insured has to have recently declined in health
too!

The very long story short is simply that I don't agree with
Smartmoney's ad. That's a pie in the sky example that is far from
realistic.

(note: institutions buy LS policies in blocks, so the law of averages
& large numbers takes care of the statistical outliers that Doug,
perhaps jokingly, mentioned).

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On May 19, 6:41*pm, Douglas Johnson <p...[at]classtech.com> wrote:

- quote -

Yeah, I'm not sure viaticals even exist in the respectable marketplace
anymore. Life settlements (LS) have become the norm. Viaticals refer
specifically to insureds that are "terminally ill" and typically have
less than 24 months to live. Life settlements, on the other hand,
refer to all other institutionally sold life insurance policies. LS
targets those who no longer need the coverage but want more than the
cash surrender value. Viaticals focus on dying individuals who
probably still need the insurance, but unfortunately, need the money
more. The policy seller is almost assured to get screwed in a viatical
sale.

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beliavsky[at]aol.com wrote:

- quote -

Sorry, you caught me in full smart-a mode. My wife says it is easy to do. I
took a light look at viaticals some time ago and decided I wasn't interested.
They started getting well known with AIDS patients, who then proceeded to live
longer than anyone thought possible. A very good thing for them, tough on the
investor.

Which exposes the "ick" factor -- waiting for someone to die to get your money
back. I'm not against them; They provide a useful service. But I think I'll
invest in other things.

I just ran across this article while using Google to spell check "viatical". It
is suggesting more than a little bit of caution when thinking about viaticals.
http://www.aarp.org/money/credit_deb...Viaticals.html

-- Doug

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On May 17, 10:02 pm, Douglas Johnson <p...[at]classtech.com> wrote:
- quote -

That depends, of course, on the size of the death benefit relative to
the cost of buying the policy and of keeping the policy in force. What
piqued my interest was an advertisement in the magazine Smart Money
that also appears at http://www.insure.com/sellyourpolicy/index.jsp .
Here is one example:

83 year-old female: $2,000,000 policy
Cash offer: $400,000

The annualized returns for the investor as a function of how long the
insured lives, assuming no further premium payments, are

#years ROR
05 38.0%
10 17.5%
15 11.3%
20 8.4%

So this would be an attractive investment, especially as part of a
portfolio of similar policies.

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beliavsky[at]aol.com wrote:

- quote -

They are if the guy has the good manners to die promptly. If he lives too long,
the returns go in the tank. -- Doug

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Is it possible for an individual to invest say $100 K in life
settlements or viaticals? How? Looking at some ads run enticing people
to sell their life insurance policies, the rates of return for
investors look high.

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