Investing in Life Insurance

Are You Worth More Dead than Alive?

Terminally ill patients sell their life insurance policies to intelligent investors. Terminally ill patient gets a small pile of money upfront to make their last days more bearable, and the investor gets a huge payout at the end of the day. Brilliant investment idea. I should sell my life insurance policy too! Over 50% of Americans die within 2 years after retirement. That’ll be my selling point.

Selling your life and selling a house have more in common than you’d think. The seller puts a listing on the market. Prospective buyers do research and get inspections; there are offers and counteroffers until the seller accepts a bid. The seller doesn’t literally peddle his own life, of course, but his life-insurance policy. The distinction is in many ways moot, however, as the sales value is inextricably linked to a cold-eyed estimation of how much longer the seller has to live.

I can’t believe an entire market already exists for this sort of thing.

Large portfolios also allow mortality to be packaged for sale in ways that, for better or worse, recall the byzantine ingenuity of the subprime era. Settlements can be pooled, sliced and recombined into a dizzying array of financial instruments, including ‘’death” bonds, derivatives, notes and swaps.

Are You Worth More Dead Than Alive? –NY Times