the beginning of the end : Death Bonds!

In the early 1980's and 90's, AIDS was rampant and incurable. The sufferers needed cash, and so they started selling their life-insurance policies to investors/companies who were ready to pay cash. They got the much need cash and they did not have to pay premium anymore! The investors paid the premium till the insured died and made themselves a neat profit, if they died early!

"Death Bonds" or "Life Settlement-backed Security" are rapidly becoming the safety nets for companies from the turbulence of the other investments for the obvious reason that 'Life Expectancy' is not as volatile as the other financial instruments - but for the terrorists who are likely to have invested only in Death Bonds. Life insurance policies are pooled together, repackaged ('securitized') into bonds and sold to investors.

"Profiting From Mortality - Death bonds may be the most macabre investment scheme ever devised by Wall Street " - Businessweek Cover Story, July 2007

For example, if the person is insured for Rs 10 lakhs upon death, the investor buys the policy at a lump sum of Rs 5 lakhs. For the insured, this is quick and easy cash - the investor bears the premium and waits to the get the money upon death of the insured.

Death Bonds are still unheard of in India; but they are fast becoming a popular and safe investment in Europe and United States. Death Bonds may still be far in the future in India, but how eerie is it knowing that the investor wants you DEAD!