Banking in 2014: The Death Derivative

Over the past year, banking deaths or “suicides” as they are routinely tagged, have been on the rise. Any idea why?  Seems pretty odd that as many people are falling to their death from penthouse offices as there are steelworkers 2,000 feet high, doesn’t it?

First, to help you understand, let’s take a look at Wal-Mart. About a decade or so ago, someone obtained an inner-office memo between a high ranking Wal-Mart official and their insurance agency. In the memo, the high ranking official is upset with the insurance agency because Wal-Mart didn’t make any money that particular year through insurance. Wait….make money on insurance? Yup…

Ever wonder why Wal-Mart only hires people half as smart as you? Ever think, I bet that person is not only handicapped, but too dumb to know their left from their right? We all have at some point I bet. Lord knows, I would consider a Wal-Mart ‘greeter’ as the lowest IQ job on the planet. This probably makes you ask yourself. Why on earth would a large company hire twice as many incapable employees when they could hire some qualified individuals in this economy?

What if you took out insurance policies on all of your employees? Most businesses couldn’t afford to do this as it would take a large amount of capital to pay out on thousands of policies for 10+ years before having a chance to collect a return on your investment. WalMart not only had the money, but the brains to realize that if they hired people with short life expectancies, they would make a return on their investment MUCH quicker. Ethical? Nah. Moral. Nah. A money maker? Of course.

This brings me back to that leaked memo. In the memo, the agent explains to the official that WalMart didn’t make a return that particular year because several of the deaths were suicides (most insurance policies do NOT pay out for suicides).

Now this brings me your next history lesson. Around this same time, in 2007, banks created a Life Index. That’s right, a way to more/less invest in deaths. (Hell, they had to do something since the real estate bubble we were living in had popped) In late 2013, these indexes became burdened for several reasons. Now, you are starting to see the deaths of many high ranking and predominately young (younger the better for a payout) bankers.

In Layman’s terms, this means that banks are betting that people die sooner rather than later. That is because these same banks will need to pay the insurance companies if they have to payout more money than they had actuarially predicted because the people they cover are living longer. The bottom line is that these banks are looking to profit from early deaths. The longer the insured individuals live beyond an agreed upon average age, the more the bank must reimburse the insurance companies. Not to mention that most employers have policies on these high ranking officials already. I suppose double dipping never tasted so good.

  • “To the well-organized mind, death is but the next great adventure.” ~ J.K. Rowling
  • “The fear of death follows from the fear of life. A man who lives fully is prepared to die at any time.” ~ Mark Twain
  • “A thing is not necessarily true because a man dies for it.” ~Oscar Wilde