On Monday, April 20, 2015 at 8:36:21 PM UTC-4, krw wrote:
On Mon, 20 Apr 2015 12:48:37 -0700 (PDT), DerbyDad03
wrote:

On Monday, April 20, 2015 at 3:33:04 PM UTC-4, Ed Pawlowski wrote:
On 4/20/2015 1:01 PM, krw wrote:

;-) I can't think of an investment that wasn't intended to have a
positive return.
How about life insurance, Mr. investment expert. ;-)

Only criminals "invest" in insurance. For everyone else, it's an
expense. The return is *expected* to be negative. It *has* to be
(for other than one contemplating insurance fraud).


Life insurance can have a great payback if you die at the right time.
Not everyone does though. Poor planning, I guess.

Sometimes life insurance policies can "pay off" twice. Once when the owner sells it, then again when the insured passes away.

No, once you sell an insurance policy it's no longer in force.

Perhaps you are not familiar with Life Settlement transactions. Just to make sure that we are starting on the same page, here are some definitions related to life insurance, stolen without permission from:

http://thismatter.com/money/insuranc...eneficiary.htm

Owner:

"The owner of a life insurance policy is the one who has the rights that are stipulated in the contract. These include the right to name a beneficiary; the right to participating dividends; the right to surrender the policy for its cash value; and the right to transfer ownership."

Insured:

"The insured, who is often the owner of the policy, is the person whose death causes the insurer to pay the death claim to the beneficiary. The beneficiary can be a person, trust, estate, or business."

Note the owner's "right to transfer ownership". If the owner enters into a Life Settlement transaction, he is transferring the ownership of the policy to someone else. Once the ownership has changed, the new owner has the right to name a beneficiary. Of course, the new owner now also has the responsibility to adhere to the terms stipulated in the original insurance contract, which may mean paying premiums and other fees required to keep the policy in force.

Nothing in a Life Settlement transaction causes the policy to no longer be in force.

Worse, the life payout is reduced by the value of the policy.

What "value" are you referring to? The cash-value? If so, that is not actually true.

In most cases, entering into Life Settlement transaction does not impact the current cash-value of the policy because other than the change of ownership (and most likely the beneficiary) the policy itself has not been changed.. The cash value has not been withdrawn, so the death benefit itself has not been reduced. The original owner receives payment with funds that are external to the policy.

Granted, the *total return* to the new owner - assuming the new owner is also the new beneficiary - will be less than the death benefit paid out when the insured eventually passes away. The total return will be the death benefit minus the sum of the cost of the contract (amount paid to the original owner), any commissions and fees paid to the broker, any premiums and fees paid to the Ins Co, etc.

If the new owner does not name him/herself as the beneficiary, then the beneficiary will receive the full death benefit.

Whole life insurance is a miserable bet.

That statement, in and of itself, is worthy of it's own long, drawn out discussion.





See "Life Settlement Contracts", sometimes known as a Viatical settlements.