The Shape of Tax to Come

A Tax & Estate Planning blog for 21st-century Texans

KISS High-end Life Insurance?

The Wall Street Journal is reporting that Gene Simmons has finally gotten into the insurance business. Gene Simmons, as you may know, is the lead singer of the rock group KISS. He has been exploring new and exciting ways to slap the KISS logo on any and all products for the last three decades. At this point, his marketing and merchandising efforts have long since jumped the shark. I could come up with something witty, but that would just be a waste of time. Honestly, I’m curious why it took him so long to finally get involved in this market.

Mr. Simmons’s new group, Cool Springs Life Equity Strategy, was launched last month to tap into a lucrative demographic: entertainers, sports stars and other people with a net worth of $20 million or more who need a life-insurance policy of $10 million or greater. The firm’s founders, who include David R. Carpenter, formerly of insurance powerhouse Transamerica, believe there is big opportunity to sell jumbo insurance policies to rich people.

Yes, undoubtedly there is.

“I’ve been in the business my whole career, and life-insurance executives do not have audiences,” adds Mr. Carpenter, the Transamerica veteran. “Gene has audiences. Gene has the reputation [as] a genius merchandiser and marketer. He has great ways of conceptualizing products.”

So, slapping “KISS” on anything nearby, regardless of quality, equates with genius merchandiser? While the KISS army might be dumb enough to buy any stupid thing you sell, people in the market for this amount of insurance are probably not going to be fooled by the whizz-bang feature of having Gene Simmons on the label. Failing that, their lawyers should stop them from succumbing to Gene’s hypnotic advertising powers.

But Gene would never lead you astray, would he?

Some advisers and estate-planning attorneys (Including this one-ed.) aren’t enthusiastic about the notion of borrowing money to pay insurance premiums under any circumstances. They say borrowing costs can run higher than the buyer expects, or the arrangements can run into other problems, such as a bank tightening its collateral requirements. One of the biggest concerns is that borrowing programs presume that savings within the policy will earn more than the interest on the loan—but if interest rates spike sharply, the borrowing costs could jump ahead of interest earnings.

Thankfully, the Journal was good enough to find a lawyer to talk about this so I don’t have to.

“Tell me when Alice Cooper comes out with one”

Um, yeah. What he said.

He should be wearing makeup

April 12, 2010 - Posted by | Uncategorized | , ,

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