AIG Attempts to Sell “Death Bonds”

American International Group is attempting to gain support among its investors for the sale of what critics call “death bonds.” These bonds are the result of financers bundling hundreds of life insurance policies and then selling them off.

These bonds do not pay off until the insured dies, and for many investors these bonds are not economically efficient as individuals are living longer than expected. Standard & Poor has already declined to provide AIG a rating, a crucial step in selling investors these securities.

John Sullivan, AIG Tries to Sell ‘Collateralized Death Obligations’, AdvisorOne, Apr. 22, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.