SPeculator INitiated/Investor Owned/Stranger Owned
December 17, 2006 11:17 AM   Subscribe

SPINLife is a recent phenomenon--rife with regulatory[pdf] debate[pdf]--that finds hedge funds, savvy (and otherwise) investor types, and even Warren Buffet[pdf page 21] placing bets on the death of old people. Free cruises, kindly telemarketers offering $50,000 checks? Sure, just sign your life(insurance) over to us!
posted by jckll (16 comments total) 2 users marked this as a favorite
 
In return, the investors will get the policy’s $7 million payout when he dies — which they hope will will arrange to be soon, so they can stop paying his premiums.

Fixed that.
posted by weapons-grade pandemonium at 11:50 AM on December 17, 2006


Yeah, that's the problem most cited with this business model, the whole "incentive to kill" thing. But don't a lot of businesses have that? If I give a contractor a down payment, isn't that an incentive for him to kill me and keep it without doing any work?

But these stakes are higher, providing more incentive? Then is it really just high stakes relationships we're worried about? In lot's of business partnerships one party could benefit if the other up and died.
posted by StickyCarpet at 12:16 PM on December 17, 2006


sort of weird since life insurance is usually intended to benefit one's next of kin. Usually, it is a way of avoiding paying taxes on inheritance funds.
posted by bhouston at 12:17 PM on December 17, 2006


life insurance is usually intended to benefit one's next of kin

Since people are generally insurable only up to their total net worth or extrapolated life value, the best candidates for this are high net worth individuals who have already provided reasonable benefits for their next of kin and allocated all they can be expected to for this, but still have additional insurabilty that they don't want to pay for.

Otherwise the next of kin can be expected to provide resistence.
posted by StickyCarpet at 12:25 PM on December 17, 2006


Otherwise the next of kin can be expected to provide resistence.

In my experience, the insured put up quite a fight too.

Okay, I've said too much.
posted by hal9k at 12:30 PM on December 17, 2006 [1 favorite]


Pretty unsavory business model. Vultures shaped like people.
posted by fenriq at 12:42 PM on December 17, 2006


It's a negative re. And like card counters in a casino, the house (in this case, the insurance industry) wants to brand those skilled and bright enough to exploit these mechanisms, evil doers, as if they (the insurance industry or the casino) should have some guaranteed monopoly on profit. For the insurance industry and the casino don't see themselves as ever hostages to the laws of chance, but expect their marks to accept such a position.

Good "luck" to Grandma and Grandpa, and to every person on the MIT blackjack team.
posted by paulsc at 12:45 PM on December 17, 2006 [1 favorite]


I dunno, paulsc...I can't really see painting either the insurance industry or these "skilled and bright enough" in a favorable light. The industry is pretty much loathesome. But these guys strike me as being parasites to the loathesome.
It all just smells like all kinds of wrong to me. One of those areas where profit motive steamrolls morality.
posted by Thorzdad at 12:58 PM on December 17, 2006


And, yeah, I realize morality is irrelevant in a free market.
posted by Thorzdad at 12:59 PM on December 17, 2006


those skilled and bright enough to exploit these mechanisms

If insurance companies were to follow the business dictates of their own actuarial science they would dump older people. But that would make them look too greedy when trying to present themselves in a good light. These guys are going in and maxing out on that vulnerability.
posted by StickyCarpet at 1:14 PM on December 17, 2006


How is this worse than a reverse mortgage?
posted by dhartung at 1:19 PM on December 17, 2006


This all seems like a great loophole that the elderly can take advantage of to gain some sort of income in their later years. It sounds like a win-win in princliple for the policy holders and the investors.

The real moral problem that I have with SPINLife is the group that uses telemarketing, free cruises, and coersion to get these people to sign up for life insurance. That's just another old people scam and it sounds like alot of people stand to get screwed over by their shit.
posted by nomad at 1:24 PM on December 17, 2006


dhartung:

Funny you ask that...nothing.
posted by jckll at 1:59 PM on December 17, 2006


And, yeah, I realize morality is irrelevant in a free market.

Nope if by morality you mean decisions for or against some behavior, they are relevant in a free market in which they are part of "information" needed to take decisions. Yet no market is really free, the free market MODEL is just a very interesting intellectual conception, but anybody with a brain and a degree in economics know that no model is ever perfectly implemented in reality.

Also a regulatory government plays a signficant role in a free market, as it is supposed to remove a number of distortions in perfect competition. Some other think the market will immediately balance itself thanks to invisible forces like the so called "invisible hand" and that no government intervention is needed ; usually these who say that are the first to seize government power and abuse it.

Anyway you want to look it a perfect competition free market would probably benefit more the have-not than the haves , so I don't expect competition to really start between big players anytime soon.

But you can have all the competition you want and die competing, it's honorable , so said the tupperware salesman.
posted by elpapacito at 4:08 AM on December 18, 2006


the house (in this case, the insurance industry) wants to brand those skilled and bright enough to exploit these mechanisms, evil doers

That "bets" link above strongly implies the insurance companies don't care, since "they get to book more policies and collect more premiums."

Otherwise the next of kin can be expected to provide resistence.

If they find out about it. If some of these companies are using sleazy, confusing or coercive techniques to take advantage of elderly folks, it's likely that "your kids don't need to know" is part of the approach.
posted by mediareport at 6:41 AM on December 18, 2006


Cypherpunks may recall Jim Bell's Assasination Politics idea.
posted by rush at 12:27 PM on December 18, 2006


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