Odds Skew Against Investors in Bets on Strangers' Lives

[marmar]

from the WSJ:



By MARK MAREMONT And LESLIE SCISM


In the summer of 2005, a firm called Life Partners Holdings Inc. said Marvin Aslett, an Idaho rancher 79 years old, had two to four years to live.

It didn't make this estimate on his behalf but for its customers. The company arranges to buy life-insurance policies from people like Mr. Aslett and sells fractional interests to investors, who collect the death benefits when the insured people die.

The investors in a $2 million policy on Mr. Aslett's life would have made a tidy return had he died as projected. But more than five years later, the rancher, now 84, says he runs on a treadmill, lifts weights and chops wood, adding that all of his grandparents lived well into their 90s.

"I'm healthy as a horse," he says. "There's going to be a lot of disappointed investors."

Life Partners, a fast-growing company in Waco, Texas, has made large fees from its life-insurance transactions while often significantly underestimating the life expectancies of people whose policies its customers invest in, a Wall Street Journal investigation found. ..............(more)

The complete piece is at: http://online.wsj.com/article/SB10001424052748704694004576019344291967866.html

[Hello_Kitty]

1. My heart bleeds for them. eom

[Sal Minella]

2. How ghoulish can "investors" get? Don't tell me. n/t

[bbgrunt]

3. seems to me Marv needs to stay off of small planes.

I'm sure those "investors" don't like being scammed.

[whosinpower]

4. This "business" is abhorrent

And I hope that every single one of those "investors" choke on their premiums.

Then again - the founder alredy went bankrupt once and ran into trouble with the SEC. Note of interest - there is nothing inherantly illegal according to the current laws - only when the investors are defrauded because they were told they would be beneficiaries in 3-5 years and people live longer than expected......

Capitalism at is ugliest, in my opinion.

[Gothmog]

5. Brian Pardo is not a nice man

The CEO of this company is not a nice man and has been sued by the SEC before. I would not be surprised to see another lawsuit either by the SEC or investors in the future.

[socialist_n_TN]

9. Maybe some people ought to get together and

place bets on when Mr. Pardo will meet HIS end. I saw this in another thread about this same subject and it seemed like a good idea.

[Rage for Order]

6. There was an excellent movie (dark comedy) made about this industry

The title was "The Settlement". The movie was released back in 1999, starring John C. Reilly, William Fichtner, and Kelly McGillis. I highly recommend it.

I can see where this business might serve a purpose, but it's not something I'd care to participate in. Those investors need to remember that investments carry a degree of risk, some more so than others.

http://www.imdb.com/title/tt0158937/

[LiberalFighter]

7. IMO this should be illegal.

What is to prevent someone to kill one of those insured?

[bhcodem]

8. Insurable interest

Whatever happened to regulations saying the beneficiary of a life insurance policy must have an insurable interest in the covered person? I'm sure most reputable life insurance companies still have that standard. (I have a life insurance license, although I haven't been active in the business for a long time.)