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View Diary: WI-Sen: Social Security is a Ponzi Scheme (166 comments)

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  •  as GOPFL points out, that isn't how (0+ / 0-)

    insurance companies operate -- certainly not life insurance companies, at any rate.

    rather, they accumulate an ENORMOUS reserve against their downstream inevitable liability. They invest that reserve. The profits from those investments are what pay the stockholders, and in the case of whole life insurance, eventually pay off the policyholders, one way or another.

    if i started a whole life insurance company and took my customers' premiums and handed them over to my stockholders (and my executives, ahem), so that when my customers started dying, or their policies matured, there weren't enough assets to cover the benefits ... that's pretty much a definitive Ponzi scheme (though one with two classes of investors, the stockholders and the policy holders).

    To put the torture behind us is, inevitably, to put it in front of us.

    by UntimelyRippd on Fri Sep 17, 2010 at 08:39:45 PM PDT

    [ Parent ]

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