Should You Buy Longevity Insurance?

Of course, in a worst-case scenario, if you don’t make it to age 85, then you’re out the entire value of the policy – you can’t bequeath it to your spouse or other loved ones, with one caveat. Some (very few, quite frankly) insurance companies allow you to purchase a death benefit that, while reducing your monthly income if you do make it to old age, providing a payout to your surviving spouse. The Hartford (Stock Quote: HIG) is one insurer that offers a death benefit on longevity polices.

Obviously, longevity insurance isn’t for everybody. You could bypass the longevity insurance and bet on the stock market – as many senior citizens do, even in these troubled times. There are other options, like deferred annuities, longevity insurance may have trouble gaining traction. But if you’re a firm believer that you’re a future member of the century-club, then a longevity insurance policy can make good sense.

If you do opt for such a policy, buy from a solid insurer that you know will be around in 20 years. Moody’s and Standard & Poor’s both have good rating systems for insurance companies, and they’re worth a look. Also, keep your initial outlay to 10%-to-15% of your total financial assets.

After all, you don’t want to bet the farm that you’ll reach your late 80s or 90s—but you can sure bet a piece of it.

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