Longevity insurance
The Wall Street Journal looked at longevity insurance (excerpt here, subscribers here), which is insurance that pays a guaranteed income, normally after someone turns 85. Given that lots of people fear running out of money if they live too long, it is interesting to see insurers appealing to that fear. The WSJ calls these policies “a new spin on deferred fixed annuities”.
Longevity insurance porvides guaranteed income typically starting after a person turns 85, in exchange for an initial investment made some 20 years earlier. Payouts are fixed and cover you and your sponse for as long as you live.
The main advantage over a deferred annuity? Higher income payouts. Possibly much higher (the article compares a $137 monthly payment to a $710 monthly payment).
The downside? Much less flexibility, like no withdrawals before 85, and typcially no death benefit. If you die before then? Tough beans. There are more flexible schemes, but the cost is lower monthly payments. The Journal gives the expected caveat that longevity insurance should only be part of the financial plan.
Appropriate financial management is going to be a key to a sucessfully extended lifespan. No question there. But perhaps the best longevity insurance won’t come from an insurer. It’ll come from living a lifestyle that promotes longevity, and from embracing the life-extension opportunities as they safely emerge.
Update: Zen Personal Finance did a piece on this, which points to a SmartMoney article.
