A lot of people have recently found the occupation “Investment Bankers” is equivalent to “Devil.” It sounds cynical and radical but sometimes it does have a point. After the implosion of mortgage-backed securities in 2007, the Wall Street is going to invent a new form of securitized product that packages life insurance policies. Yes, it is true. Your life is going to be technically for sale in near future.
According to an article posted on New York Times on September 5, Goldman Sach is going to buy out insurance policies from people, repackage them into bonds and sell them to different institutions. A few years ago, Goldman Sach used the values of our homes to design a bubble that ignites the explosion of the global economy. This time it is using the prices of our lives to create another bubble.
What is it all about? Let me give you an example. Most of us pay a few hundred bucks per month for a life insurance policy. Say, if we pay $100 USD per month for 10 years, our children would collect $1 million from the insurance company if we decease. However, not many people could make the $100 USD per month commitment. Let’s say there is a man who cannot pay after making 5 years of monthly $100 payments. If he wants to cancel the policy, he can only, say, get back about $25,000 from the insurance company.
And here comes the bankers – they are going to buy out the insurance policy. They are going to pay the people who are going to discontinue the policy for about $60,000 (that is the five years of $100 monthly payments, I’m just guessing that is the maximum bankers are willing to pay, any amount more than that the bankers would find it charity work), but take their life insurance policy. If the person dies, the bank is going to get $1,000,000! In other words, the bankers want the person dead to make money!
The bankers are going to package all different life insurance settlement polices into bonds with different maturities and sell them to other institutions. Goldman Sachs is going to make millions of dollars just for the service fees. And technically speaking, our lives are put on the gambling tables where the investment banks and insurance companies are placing their “long” and “short” bets on how long we will live.
And not to mention there will be more exotic derivatives products that could only be invented by extraterrestrial life forms, such as “Policy Default Swaps,” “Death Protection Warrants” and “Collateralized Life Insurance Obligations.”
Do you know what I am afraid of? First, insurance companies are going to raise our premium. Since the insurance companies are afraid we’re going to die soon and pay large sums to the banks, they have to make us pay for putting up more premiums to prevent their loss. So Goldman Sachs robs the insurance companies and the insurance companies in turn rob us. Indirectly, every one of us who has an insurance policy is paying for their gambles although we never have a chance to share their profits!
And what happens if one big insurance company makes the wrong bet and we do suddenly die of a widespread disease? By that time, the banks who want people dead got their wishes come true and the insurance companies have to make the final payouts. And who knows what kind of crisis we will get into? If the bets continue, will the insurance companies even fail to pay for the life settlement insurance? In other words, if we die, we may leave our children penniless because the insurance companies cannot pay. And eventually, who pays? The government comes to the rescues and uses the taxpayers’ money to pay again. The banks rob us and it is us again who save ourselves.
Despite my concerns, I am betting that we WILL see something like that happening in the next few years, probably as early as 2010. By that time, everybody does have a price.
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