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Derivatives and Securitization: Is your life insurance about to become detrimental to your health?

Take the mortgage derivative game, inject it with criminal organizations and death and you get the new incarnation of mortgage fraud, the life insurance derivative. The derivatives game just got worse, but in a very bad way.
The basic framework of fraud was set up in the mortgage derivatives game in which people innocuously call unexpected counter party risk. In essence, the creation of companies with little to no assets guaranteeing billions or trillions in order to insure policies so they could be packaged and sold as “risk free” already affords a rich field in which to reap tons of money in derivatives policy fees for years with no expectation of payment. Even with such fiascoes, there is still not substantive policies today to close this loophole or illegalize it. And reserve requirements even at 1% are being balked at (most likely because the people who wrote these contracts don’t have or can’t even afford 1% of what they insured).
Now inject the grim factor of death. Already the sales and securitization of life insurance policies are getting criminal organizations into the game of life and death. In this system you get people who can’t afford life insurance (eerily just like mortgage home policies) to buy life insurance. Then when they can’t pay you offer to buy them out asking them to switch the beneficiary to you in which you pay them a fee and take over their payments. It is funny how suddenly it pays for you to be dead. It is close to putting a contract out on your own head. I suppose that’s why organized crime likes it so much.
Of course, the other side of the fraud is giving people you know will die insurance, packaging them, and then asking stupid companies like AIG to buy them. This works especially well when you somehow work out with the beneficiary a commission scheme or pocket the annual income and sales of the policy and then walk away knowing that life insurance claim will fall through. But that is just boring compared fast death payouts.
You may think you are above being duped into being so foolish as to agree to something in which you know others can benefit off your death. However, the large scale securitization and derivatives premised on life insurance policies allows this fraud to be played on anyone who gets a life insurance policy.
In essence, once a derivative is sold on your dying the person buying it can either keep it as an insurance against your death thus protecting a policy from early death, or they can sell it if they think they can get more than its worth. Also, the ones issuing death derivatives (derivatives insuring against early death) which is a lot like mortgage defaults, can issue derivative insurance multiple times over against your death if they feel like your risk of death is lower than the premium they receive or they just want the extra fee income (because they are running a ponzi scheme with an intention of going broke before payment). This is what AIG did but with home mortgages. Unfortunately for them, they bet against Goldman Sacs who sold the home mortgage bonds they bet against.
Anyway, in both cases where the derivative is not being used to hedge against your insurance policy the person buying the insurance is gambling on your death. Or perhaps if something unfortunate has already been planned for you, it isn’t exactly gambling is it? In essence once again you have finance a hit on yourself.
Since you will never know who wrote the contract, sold the contract, or who really holds your life insurance policy anymore good luck finding out if anyone is benefitting off your death. Since you might not be around there will probably be no one to find out after the fact.
There is one big difference in mortgage derivative fraud and life insurance fraud. Mortgage derivatives fraud preys on the poor. Life insurance derivative fraud most likely will prey on the rich. In this macabre system the richer you are and the richer your insurance payout, the more profitable it will be for you to meet a bad demise. Thus no longer will criminal organizations need to con little poor old people to make trusts to them as they pay their insurance premiums. They can now go after the wealthy, buying up contracts profiting on their death legally without them even knowing. Likewise, the early demise of a rich payout will skew the value of a life insurance bond package and its derivative much more than a package of loans since larger loans like jumbo loans are usually separated from smaller loans by risk profile (life insurance is separated by life expectancy). Thus they can sell packages of life insurance policies in full knowledge they are getting the better end of the deal (since they might already have bought the derivatives on some people in those packages).
Sadly once securitization takes hold there is almost nothing you can do to prevent fraud being perpetrated upon you short of cancelling your life insurance policy.
Since this is such a rich, yet morbid field in which crime of the worst type can occur, the barring of securitization and the subsequent derivatives that follow should not just be regulated but outlawed. Seeking to thwart the criminal organizations that coerce people to buy insurance they can’t afford and then set up trust funds and sell their life insurance to them is just the tip of the iceberg. Even then, since like so many other things, the legal aspects run into multiple legal jurisdictions (trust/inheritance law and insurance law) stopping even this has been impossible up to this day. Can we trust the government to create an overarching death panel to tie all insurance and death benefits law under one roof top prevent fraud and abuse that will undoubtedly plague it? I am guessing not.
I hope regulators read and become aware of the very large dangers of securitizing life insurance. Thinking insurance companies know better than to engage in shady and unprofitable life insurance and derivatives dealers is laughable (look at AIG for instance). Likewise believing that fly by night companies that engage in selling derivatives are on the up and up is also ridiculous. You are just asking for it when you allow the payout from death to be separated from the liability from death. Especially if you allow it to be sold and packaged in a way in which only the criminal elements misusing them for their own nefarious purposes can quickly and easily figure out who actually owns your life insurance policy and who benefits from your death.