Friday, November 07, 2008

Longevity insurance provides an annuity if you live long enough, could protect adult children

The AARP Magazine for November/December 2008 has a “Short Answer” column on p. 20 about longevity insurance. I couldn’t find the online version yet, but there is a similar piece by Jim Miller in Consumer Affairs here.

Longevity insurance, now available from some companies like Met Life, will pay an annuity starting at a certain age. The annuity, if you live long enough, is much greater than a normal annuity. The trouble is you have to pay premiums the whole time until you reach that age, which is normally just beyond your life expectancy for the age you are at when you start it. If you don’t live long enough to collect, you’ve paid premiums “for nothing”, just as with term life or with auto or casualty insurance.

A policy like this could help protect adult children if states start enforcing filial responsibility laws in the future. A senior living longer than expected and unfortunate enough to develop Alzheimer’s Disease might collect, in the annuity, a considerable portion of what custodial care could cost.

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