Saturday, December 8, 2007
Earlier on this blog, I discussed talk-show host Larry King’s suit against an insurance brokerage that bought policies on his life.
Liam Pleven and Rachel Emma Silverman, Betting on death in the insurance business sparks controversy, Wall St. J., newsday.com, Nov. 26. 2007, have more details on this practice:
In an arrangement known as a "life settlement," Coventry pays the holder a lump sum for the policy now, takes over paying the premiums for as long as the insured person lives, then collects the benefits -- generally worth far more -- when the person dies.***
Policyholders*** have lodged complaints. Television talk-show host Larry King filed a lawsuit in October against a Maryland insurance brokerage, claiming he got a raw deal when he sold two policies on his life, with face values totaling $15 million, for $1.4 million.***
Coventry and other firms controlled by the Buerger family make money by buying up policies and collecting the death benefits, collecting fees on policies they manage for others, and arranging loans to people who want to finance their premiums.
Authorities have challenged some deals as well.***
Coventry says it believes the few remaining claims "have no merit."***
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.