Pros and Cons of Death Bonds

Death bonds are a type of bond that is based on a group of life insurance policies. Individuals will sell their life insurance policies to investment companies and the companies will then package the policies together to form bonds. This type of investment carries with it some advantages and disadvantages for investors. Here are some of the pros and cons of death bonds.


One of the big advantages of this type of investment is certainty. There is no question that every individual that has a life insurance policy in the bond is going to die at some point. As an investor, this creates a level of assurance that you cannot get from many other investments.

Another big advantage of this type of bond is that it provides investors with a way to diversify their portfolios. Regardless of what type of financial investment you put money into, it is most likely going to be tied to the stock or bond market in some capacity. With these bonds, that is not the case. People are going to die regardless of what happens in the markets.

With death bonds, investors are also going to be able to bring in tax-free income. Money from life insurance policies is not taxable and is simply being distributed to the bondholders of death bonds in this situation. This provides a big advantage over other types of bonds and investments. You can put money into these bonds and bring in some nice returns without ever having to pay taxes on them.


Even though this type of investment is very attractive for investors, there are also a few disadvantages. One of the biggest problems in this industry is that there are several scams. Many companies have attempted fraud in order to take advantage of investors. If you are going to get involved in this market, you definitely need to do your homework and make sure that the company that you are working with is legitimate.

Another problem with these types of bonds is that it can be difficult to find the information that you need about the companies that issue them. Most of the companies that issue death bonds are private companies and do not make information readily available about them. Therefore, you have to request information from the companies and hope that they provide you with the information that you need to make a decision. This can lead to individuals making bad investment decisions without the proper information at hand.

Another potential problem with this type of investment is that you are benefiting from someone else dying. As an investor, it can be difficult to invest in something that only makes money when other people are dying and families are suffering. In order to invest in this type of bond, you have to overlook certain moral circumstances.

There is also the risk that the government is going to step in and start regulating the industry in the near future. This type of tax-free income is not going to be available forever.

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