Life settlements let people cash in on their own life insurance. Here's how it works

+ Here's how it works August 21, 20264:45 AM ET Heard on Morning Edition By Vito Emanuel Life settlements let people cash in on their own life insurance. Here's how it works Listen &middot; 3:37 3:37 Transcript Toggle more options Download Embed Embed "> <iframe src="https://www.npr.org/player/embed/nx-s1-5910560/nx-s1-9895492" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player"> Transcript What began as a way to help dying people pay for their final years of life has evolved into a robust and morbid financial market. Sponsor Message Transcript LEILA FADEL, HOST: Right now some of the biggest firms on Wall Street are waiting for thousands of strangers to die. They're part of a multibillion-dollar market for speculating on people's life insurance policies. Planet Money's Vito Emanuel has been exploring the life settlements industry.

+ VITO EMANUEL, BYLINE: Frank Sierawski is a cancer survivor, and he's got this outside-the-box brain for finance. So when he heard about this thing called a life settlement on a cancer survivor Facebook group, he was intrigued. This is where you can essentially sell your life insurance policy to a company and get some of the payout to use now while you're alive. The company pays the monthly premiums for you, but the deal is they get the payout when you die. FRANK SIERAWSKI: It's an asset I didn't know I had, which was, like, whoa - mind-blowing. EMANUEL: So he gets curious and fills out some forms online. SIERAWSKI: That's when the people started calling. It was like half talking to a guy at the mortuary and the used-car place at the same time. EMANUEL: And Sierawski knows finance. He's an auditor at a major railroad who's used to thinking about all kinds of things in spreadsheets. So he's uncommonly comfortable with the morbid math of life settlements. And his life insurance is actually worth more to these companies the closer they think he is to death, so he figures his cancer history might net him a better offer. SIERAWSKI: The best-case scenario is for them to think I'm about to die, just because that means they're willing to pay more because they think they'll get paid faster. EMANUEL: Life settlements can vary wildly in how much they pay. Usually, they're, like, $0.20 to $0.40 on the dollar of the death benefit. It is grim, but it's also legal. A 1911 Supreme Court case said, roughly, that your life insurance policy is a piece of property, like a car or a house that, with a few exceptions, you can sell to whomever you want - even to investors. SCOTT PAGE: That was a necessary evil. What was driving us was the fact that we were helping people. EMANUEL: Scott Page was there at the beginning of the industry. It was the 1980s, and his partner, Greg, was dying of AIDS and dying broke. So the couple worked out a loose deal with a wealthy benefactor who loaned them money to keep paying Greg's life insurance premiums and to help make the remainder of Greg's life more comfortable. PAGE: If I wouldn't have had the money, I wouldn't have been able to write him a check to give him the oxygen that he needed to help keep him alive. EMANUEL: After Greg died, Page repaid the benefactor using the life insurance money. And soon, other people with AIDS wanted similar deals - so many that Page started a business. And by the mid-'90s, he had brokered more than 3,000 of these deals. Eventually, new companies sprang up, offering to buy anyone's life insurance policy - young, old, sick, healthy, whoever - and packaging them up to sell to Wall Street. PAGE: It was to the point of where I was always scratching my head, thinking, have we forgotten why we started? EMANUEL: Today, this strange market might be on the precipice of another fabulously lucrative renaissance because there are lots of soon-to-be-old people. And as healthcare costs rise alongside life insurance premiums, selling off policies for some quick cash might look more attractive. Not that it's an easy decision. For Frank Sierawski, the cancer survivor, he was crunching the numbers to try to make it make financial sense for his family. SIERAWSKI: It's like, OK. Am I taking away a huge sort of windfall that could make my death a little more palatable to them (laughter)? Right? I mean, I don't know. EMANUEL: He ultimately accepts an offer for $0.31 on the dollar. It's less than he hoped, but he's got a plan. He's going to reinvest the money. And if he reinvests it aggressively enough and lives long enough, he could make even more than the initial payout. He's just got to beat the odds. Vito Emanuel, NPR News. (SOUNDBITE OF MUSIC) Copyright &copy; 2026 NPR. All rights reserved. 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