New zero premium life insurance policy/life settlements

[STIBROKER]

hummmm....here are the players....


the bank
the insurance co.
the old people



who is going to get screwed.........

 

[somarco]

You do have to be licensed in the states that the agent is in to receive compensation...

Not necessarily.

Depends on how it is classified.

If a bonus or finders fee, you may not have to be licensed.

If it is a commission, you do, sometimes.

When I was active with CGI there were a few states where I could recruit and earn overrides without having a non-res license.

There are organizations that allow you to build downlines and pay bonuses on all beneath you without requiring you to have a non-res license.

 

[somarco]

Who will be the owner of the policy?

The investors should be.

That of course puts an interesting twist on the rights of the insured.

If the insured is the owner, they can change the beneficiary, strip the cash values, etc. The investors could be covered by collateral assignment for their beneficial interest, but that would still leave the insured (owner) to strip the cash.

 

[somarco]

How can the insurance company pay out that much?

It's called reinsurance.

The carrier is probably not on the hook for that much, especially if this is a special risk policy with limited underwriting.

Most of the risk is laid off to a syndicate who lays it off again. The reinsurance syndicate may even have a piece of the action on the death benefit.

Been done before.

(I believe it is) AIG that is in the bonded life settlement business and they buy a number of their own policies to offset the losses from some of their policies that are viaticized. They also buy the policies of other companies to balance out the risk.

This is big business and has been going on for at least 20 years. The only difference here is there are investors willing to front the cash for the premium in exchange for finding old farts looking for "free" insurance.

The family takes a portion of the death benefit while the investors take the lions share. The agent get's screwed when they are willing to take a $250 finders fee on a premium that could be several hundred, or several thousand (depending on face and age of the insured).

That's chump change. (Apology to Ed from Lebanon).

This thing smells like last weeks fish. I can't believe this thread has legs and is still going on.

 

[somarco]

Look at some of the players in the bonded life settlement business

Any of these names look familiar?
AIG
BANK OF IRELAND
BANK OF NEW YORK
BANK ONE
BARCLAYS
BEAR STEARNS
CHASE
CITIGROUP
COMMERCE BANK
DEUTSCHE BANK
GE CAPITAL
GENERALI GROUP
GEN RE
GUARDIAN RE
LEHMAN BROTHERS
M & A BANK
MERRIL LYNCH
MORGAN STANLEY
MPC CAPITAL
PRICEWATERHOUSECOOPERS
ROYAL & SUNALLIANCE
ROYAL BANK OF SCOTLAND
SCOTTISH LIFE
SOCIETE GENERAL
ZURICH

Why do you suppose companies like AIG and major reinsurers would invest in bonded life settlements if they weren't a "good deal"? Generali & Gen Re are two major reinsurers in the life business. Companies like Scottish Life, Zurich, Royal & GE are also in the life reinsurance business.

This is a good deal for them.

The agent is taking it in the shorts.

 

[somarco]

The insurance company or reinsurer needs to believe they have a greater risk of getting the premium than paying it out.

Not if the issuing carrier and/or reinsurer is also the investor.

Look at the list again. Many of the folks involved in reinsuring life policies are also major investors in the bonded life settlement business.

 

[midwestbroker]

Boy, them there is some fancy talk. Out here in Kansas we just try to keep it nice and simple.

All this time I thought grammar was a type of fish. Shoooot. Wait til I tell ma this.

Zydo - Ali up in Raleigh. That is reason enough not to get involved.

Why do you say that? I am not second guessing you, I just want to know his reputation. I have never heard of him or Miracle Insurance, but then again I am about 1000 miles away.

 

[somarco]

I thought that was pretty gutsy to tell the NC DOI he is not ready to tell them the name of the company

Gutsy?

Maybe.

Foolish is another word.

The state said the other 2 times we had called that they cannot research anything without company name and form number.

Gee, no kidding.

 

[somarco]

I just have not heard that it is going to be set up that way so my head was blocked with the risk and not getting a piece of the death benefit.

Neither am I suggesting that is the way it will shake out.

I do know that major companies, including reinsurers, invest heavily in bonded life settlements. There is no reason to believe, assuming this is a "real deal", that it wont happen here, especially if the investors are getting the lions share of the DB.

Still think the agents who get involved in this, if it ever get's off the ground, are getting the shaft.

 

[J.R.]

When I was active with CGI there were a few states where I could recruit and earn overrides without having a non-res license.

What would be the benefits (other than the state fees) for not obtaining a non-residence license?

-J.R.