The rise of longevity insurance

Is longevity insurance the real deal, or the insurance industry equivalent of New Coke? We'll let you decide. But The Wall Street Journal's Brett Arends notes advisors are suggesting longevity insurance as an annuity alternative.

"Longevity insurance, a relatively new product, is effectively an annuity that begins paying out only if you live past age 85," he writes. "According to MetLife, which offers the product, a 65-year-old man could pay about $115,000 and receive an annual income of $100,000 when the policy kicks in 20 years later. Longevity insurance could let you retain control of your investments, finance your retirement for a set number of years and live without worrying about outliving your capital."

We've always thought of longevity insurance as annuities for the older set, only more flexible. Of course, they can afford to be more flexible when the actual chances of using the product drop dramatically with age. And any time we see the words "relatively new product" we shudder. With so much written lately about "financial weapons of mass destruction" and insolvency threats, do you really want your clients to be first into the breach?