A Creepy Way to Make a Buck, But Why Not

Always trolling for income ideas, I found a recent article that was riveting, although creepy enough for a straight-to-video movie. If you want to cash in on your life insurance without the icky necessity of first having to die, and if you don't mind someone wishing you dead every minute of the day, consider a "life settlement." A life settlement is simply the sale of a life insurance policy for more than its current cash surrender value. A policyholder can sell death benefits to an investor who pays the holder an upfront "settlement" and assumes the payments, receiving the benefit when the policyholder goes to his heavenly reward. The size of the settlement varies with the insured's health and life expectancy, generally running between 20% and 30% of the death benefit. To be attractive to this kind of investor, you should be over 65 with a half-million dollars or more in a cash-value or convertible term policy (and try not to be in the best of health). Check out policysettlement.com for an estimate of your possible proceeds.

Reading about life settlements, I remembered something I'd read years ago about tontines, named after a Neapolitan banker who started such a scheme in France in 1653. Each subscriber in a tontine paid a sum into the fund, and in return received dividends from the capital invested; as each person died his share was divided among all the others until only one was left, who reaped the final (large) benefit. In the original scheme, the capital reverted to the state when the last subscriber died, so it was a kind of national lottery. Tontines were big in France and later in Britain and the U.S. They were used to fund buildings and other public works; there are still a few buildings in Britain with the word "tontine" in their names. Later there were private schemes in which the last survivor got the capital as well. Tontines were eventually banned because there was too much incentive for subscribers to bump one another off to increase their share of the fund or to become the last survivor. (Was there a funny movie about this with Dudley Moore in it?  I think so . . .)