At least they're not viaticals

Call it settling up before moving — or passing — on. Life settlements (or viatical settlements before the marketing makeover) are on the rise, and expected to continue as boomers age. According to The New York Times, trading in life insurance policies held by wealthy seniors has quietly become a big business. The paper reports hedge funds, financial institutions like Credit Suisse and Deutsche Bank, and investors like Warren Buffett are spending billions to buy life insurance policies from the elderly. In a disturbing twist, other investors are paying seniors to apply for life insurance, lending them money to buy the policies, and then reselling them to speculators.

"This nascent market illustrates one way that investors are hoping to make money from a large and wealthy generation of Americans as they reach retirement age," writes the Times. "These aging baby boomers and those even older offer both opportunities and risks for many companies, investors and swindlers seeking to capitalize on their final years."

But the paper warns that insurance executives say transactions like these may cripple their industry and make it harder for the average senior to buy life insurance in the first place. Insurers are worried because they count on many customers canceling their policies before they die, usually because their children grow up and no longer need the financial protection, their pensions kick in, or premiums become too expensive. If far more policies result in payouts, then obviously the insurance business becomes much less profitable, and rates skyrocket.