Gene Simmons, insurance salesman

April 7, 2011
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BOSTON (TheStreet) — Would you buy life insurance from a man who dresses in spandex and coughs up blood?

Gene Simmons has embraced many personas over the years: The demonic, fire-breathing bass player for legendary rockers KISS. A rabid merchandiser who oversees an empire built on his band’s merchandise, ranging from T-shirts to designer coffins. The star of a reality series, Gene Simmons Family Jewels, gearing up for its seventh season on the A&E network.

His latest venture is helping sell life insurance to high-net-worth individuals.

Simmons spoke to TheStreet recently as he packed for a trip to Israel being filmed for his TV show. It is the first time he has returned to his homeland since — as a young man named Chaim Witz, the son of an Auschwitz death camp survivor — his family migrated to Queens, N.Y., in search of a better life.

The night before the trip to Israel, KISS played their usual set of hits, Detroit Rock City, Love Gun and Stutter among them, at Reliant Stadium in Houston. Once upon a time, backstage post-concert might have been a bacchanalia; that night it was a client meeting.

Simmons was schmoozing for Cool Springs Life Equity Strategy, a Franklin, Tenn.-based firm he helped found a year ago. The firm specializes in providing life insurance for the rich in, it claims, a very financially advantaged way.

Focusing on those with assets of $20 million or more, Cool Springs facilitates loans that allow clients to procure high-value life insurance policies with little or no money upfront. The loan, which covers premiums, can be paid incrementally or settled from the ultimate payout. The firm says this approach helps minimizes estate taxes.

Some in the industry cast a skeptical, if not critical, eye on the concept of premium financing, which other firms and insurance companies have offered over the years. Cool Springs says its strategy will succeed because the cost of borrowing and commissions are low for their affluent clients. The interest rate is flat, based upon the London Interbank Offered Rate. Clients have the option to fix the interest rate for a term ranging from one to 30 years or allow it to fluctuate as frequently as every week.

Among Simmons’ partners in the venture are CEO Samuel Watson, a 29-year veteran of the life insurance industry, and David R. Carpenter, who retired in 1995 as chairman and CEO of Transamerica. Also aboard is Richard Abramson, who managed Paul Reubens’ Pee-wee Herman character, co-created and produced the acclaimed children’s show Pee-Wee’s Playhouse and previously joined forces with Simmons for several business ventures, including a marketing firm that included the Indianapolis 500 as a client.

Simmons’ involvement came after he and Abramson, having passed on a financial product they were working on, were introduced to Watson.

Simmons role is rainmaker, an evangelist for the new firm whose fame and connections can bring in clients from the world of entertainment and sports.

And Simmons has his patter down, stressing how even the most financially savvy can be either underinsured or choosing the wrong products.

“Life insurance is a must,” he says. “It’s the one thing in your life you are doing for everybody else. Once you are dead, you really don’t care, but while you are alive it is the one big, selfless thing you should be doing. And you should try to maximize the amount of money that you leave behind to your family, your loved ones and whoever else you deem.”

Simmons is blunt that, at his company, only the super-rich need apply.

“It is not for everybody,” he says. “People of a certain economic level should be buying Volkswagens, and they shouldn’t be getting a Rolls-Royce.”

In keeping with assumptions you might make based on his public persona, it doesn’t take much prompting for Simmons to veer away from the dry selling points of insurance.

The word “premium?” He hates it, considering it a “soft sell” that avoids calling it what it is — “money, writing a check.”

“I hate fine print,” he adds, building a head of steam. “I hate it. You can’t even go in and buy a car. The sticker price is $25,000. But, by the time you leave, it is $31,000. Why doesn’t it just say $31,000 as the full price? Because they lie, that’s why.”

A mention of the estate tax, zeroed out last year and back at 35% for this year and next, propels him even more into invective.

On the national debt:
“Between bailouts and schmeckle-outs and all the -outs that the government has gotten involved in, big government is now bigger than ever. You longer need mommy and daddy to wipe your butt, you’ve got the government to do that every time you do something wrong.”

On tax policy:
“They’ve got to get the money somehow, and they are going to get it, trust me. How are they going to do it? It’s Robin Hood time. Somebody’s going to take from the rich and give to the poor. The American Dream — work as hard as you can and enjoy the fruits of your labors — is not really true. Under the present administration, which I voted for, a more accurate description is, ‘Work as hard as you can and when you finally gain the rewards of your hard work, we’re going to make sure a lot of it goes back to everybody else.’”

On jobs:
“If we don’t leave the rich alone, and I’m talking as a poor person who worked his way up, they will move to Sweden or someplace else. Keep beating up the people who create jobs and watch them go offshore. Everybody is shocked when you pick up the phone to order a magazine subscription that the order fulfillment is in India. Everybody s shocked when that happens. well, keep beating people up who create jobs and see what happens.”

On challenges entrepreneurs and small business face:
“I want to start a business, so I go and I borrow and get myself deeply in debt. I’m going to make ‘popcorn farts’ — that’s going to be my product. I have to pay rent or buy a building. I’m on the hook for that. I have to hire people, I have to pay their salaries, worry about their retirement plans and, in case one gets pregnant, I have to worry about the pregnancy plan, I have to pay for their vacations and overtime. Then, I have to buy equipment and insure the place.

“Finally I make the first popcorn fart. It costs me a dollar to make, that’s the cost of goods, and if I’m lucky I can get $1.40 to $1.50 for it. The store, the distributor and everybody else will make much more than I do, and all they do is sell it. Everybody else gets paid first, if there’s a profit I get paid last. If the business goes under, I am fully on the hook for it. And, after I make my first dollar, I have to give 50% to the government if I’m lucky. After that, if I want to leave it to my heirs I get beaten up again. At what point do they just simply come clean and say, ‘I have a gun to your head, give me your money.’ The capitalist system is not in good shape. The American dream is not what it used to be, and that is why the people who become high-net-worth individuals have to be much more diligent that they ever have been before.”

SOURCE

367 Responses to Gene Simmons, insurance salesman

  1. admin on May 14, 2011 at 11:10 pm

    You might buy car insurance from a gecko or a cave man, but would you consider buying life insurance from a blood-spitting hellion in leather pants?

    Gene Simmons, the 60-year-old co-founder of the rock band Kiss, hopes so. If you are wealthy enough, that is.

    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.

    The only glitch: Cool Springs is based in Franklin, Tenn., near Nashville but far from the entertainment meccas on the East and West coasts. Last September, the founders realized they needed a rainmaker.

    So they reached out to a fire breather.

    Widely regarded as one of the best merchandisers in the music world, Mr. Simmons has his hand in “everything from Kiss condoms to Kiss caskets,” as the bass player puts it. He is the co-executive producer and star of the reality show “Gene Simmons Family Jewels,” now in its fifth season. There is a Kiss coffeehouse in Myrtle Beach, S.C., and even a Kiss postage stamp.

    Cool Springs promises wealthy people that they can buy enormous insurance policies without spending any of their own money on the annual premiums, which can top $300,000 for older people.

    The firm purports to offer new twists on longstanding estate-tax-planning strategies. The Cool Springs Life Equity Strategy is based on the assumption that Congress will reinstate the currently lapsed estate tax. A high estate tax makes life insurance more attractive to the ultrawealthy. Policies that include a savings component can rise tax-free during the holder’s life, and proceeds at the person’s death can be free of estate, gift and income taxes.

    Cool Springs says its twist is a proprietary financing program. Working with an investment bank, it arranges a loan for the buyer to cover the premiums. The loan is repaid either along the way, out of the policy’s accumulated savings, or at death, from the policy proceeds. Cool Springs says its approach holds down a buyer’s borrowing costs.
    By focusing on supersize policies, Cool Springs says it can charge a much-smaller commission than agents normally collect—less than 40% of the first-year premium, compared with 100% or so for ordinary consumers. The rest of the money remains in the policy, where it rises over time—producing, in theory, a better return for the holder.

    Cool Springs says it has applications in progress, including one from Mr. Simmons, who says he is taking out a $10 million policy.

    Borrowing to pay for life insurance is nothing new. As debt ballooned in the U.S. in recent years, the business of lending for life-insurance purchases was brisk before falling sharply during the financial crisis, say industry executives. Life insurance firms don’t release information detailing customers’ borrowing activity, so precise figures on the market’s size aren’t available.

    The most logical candidates for the transactions are wealthy people with illiquid assets, such as businesses or real estate, who are facing large estate-tax bills. For most people of lesser means, simple term insurance, paid for out of pocket, is a better alternative, say financial advisers.

    Some advisers and estate-planning attorneys 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.

    “Premium financing is a riverboat gamble with the odds heavily stacked against the borrower,” says David Barkhausen, who runs Life Insurance Advisors Inc., in Lake Bluff, Ill. “While it may appeal to those with an appetite for a free lunch, it depends on winning a combination of bets.”

    Joshua Rubenstein, an attorney with Katten Muchin Rosenman in New York, is similarly skeptical. “What if collateral value drops or interest rates spike … or tax law changes—it did this year—or in some way the plan doesn’t perform as projected?” he asks.

    Cool Springs says it has gotten borrowing and other costs low, and is choosing high-quality policies with the best opportunity for strong earnings growth to minimize risk. It “won’t do a transaction with anyone who isn’t in a position” to write a check for the premiums, says Samuel B. Watson, a 29-year veteran of the life-insurance industry who runs Cool Springs Financial Group LLC. Under the Cool Springs Life Equity program, a buyer’s attorney must sign off on transactions.

    Kiss, the rock band, has inked many deals with lawyers over its 37-year history. Formed in the early 1970s, the band struggled to breakthrough until they re-created their live experience on the 1975 album, Alive! The band’s stage antics whipped crowds into a frenzy. Members were disguised by their heavy makeup and Mr. Simmons himself often stole the show with his liberal use of blood and fire. The platinum-selling record catapulted the band into global stardom, complete with licensing deals for action figures, comic books and other merchandise. The band lost its spark in the 1980s before resurging a decade later.

    Mr. Simmons met Mr. Watson about three years ago through a Wall Street firm where each had business ties. They have been friends since. “I felt like the best way to get the word out was through Gene,” Mr. Watson says.

    “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.”

    For instance, Mr. Simmons describes the Cool Springs program in terms of buying a sofa from a factory rather than from a pricey retailer. Say a buyer spots a beautiful sofa in a Rodeo Drive showroom but a salesman there tells him his brother works at a wholesaler and can get it more cheaply. Then the brother says his brother-in-law works in the factory. By getting rid of the middlemen, I have “no cash out of pocket,” Mr. Simmons says.

    Mr. Simmons says “the curiosity factor” helps him promote the venture. He and Cool Springs’ co-founders were feted recently at the home of a Manhattan socialite, and will host parties in London and Cannes in May following the start of a European leg of Kiss’s latest tour.

    Mr. Rubenstein, the lawyer, won’t be attending any of those events. But he keeps an open mind about new insurance vehicles.

    “Tell me when Alice Cooper comes out with one,” he says.

    Reply
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  366. Catinella on April 3, 2012 at 11:17 pm

    Greetings from Ohio! I’m bored to death at work so I decided to check out your site on my iphone during lunch break. I enjoy the information you present here and can’t wait to take a look when I get home. I’m shocked at how quick your blog loaded on my mobile .. I’m not even using WIFI, just 3G .. Anyhow, amazing site!

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