This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

'Death Bonds' Look for New Life

NEW YORK ( TheStreet) -- Sharon Brady, a 66-year-old retired law enforcement officer in Fort Worth, Texas and her husband had spent years setting aside money for retirement. In 2009 the couple decided to invest $50,000 in Retirement Value LLC, and "life settlements."

The investment play seemed straightforward, if not macabre.

Sign with a life settlement company that buys-up life insurance policies from wealthy seniors, usually with a face value of $1 million or more, and then purchase shares in the pool of policies that will pay a steady income as people die off.

The return on the investment is based on the spread between life and death: The settlement company pays higher than cash value for the policies, but less than the face value. If the numbers are crunched correctly, investors could expect a healthy return as people died and the cash and continued premiums outstripped the value life insurance policies at maturity.

"They took out a book and showed us photos and peoples' ages, and there was a doctor who explained what was wrong with each of them and how long they were supposed to live," Brady says. "You are not supposed to wish someone would die, but you make money if they do. So you are really gambling on when they do die."

The pitch seemed based on solid, if not depressing, medical observations. Brady said that the doctor that from Retirement Value claimed to have a 98 percent success rate in predicting deaths and they were shown a list of people who were "likely to die within four years."

The upside was that Brady could expect a 16 percent annual return, according to an article in the Star Telegram.

"I felt a little strange about it. You get such a high return on the money you put down," Brady says.

But then the bottom dropped out of the life settlement market.

"The truth came out later," Brady says. "I got a letter from the attorney general saying they had shut the company down. Apparently people were living twice as long as that doctor was telling us."

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AIG $54.03 0.00%
C $51.00 0.00%
CS $27.03 0.00%
GS $188.06 0.00%
JPM $59.55 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs