X-Message-Number: 125
From: Kevin Q. Brown
Subject: life insurance strategy 
Date: 15 Aug 1989

In message #8 (Aug. 5, 1988, not 1989) I was asked the following question
about life insurance coverage for funding cryonic suspension:

> 2) I don't have $20,000 or $100,000 in cash lying around.  I under-
>    stand that one means of providing the funds necessary for 
>    suspension is life insurance.  I was told that "Universal Life"
>    was far preferable to "Term" because Universal, though initially
>    more expensive, has relatively constant payments as the policy-
>    holder grows older.  Whereas Term is initially cheaper (by 50%?)
>    but gets prohibitively expensive as you get older.  Perhaps a 
>    shrewd "suspender" could 1) buy term insurance, 2) invest an amount
>    equal to his/her premiums in a vehicle returning more than the
>    paltry percentage offered by Universal Life policies, and 3) wind
>    up with $50k well before the Term policy get prohibitive.  I am a 
>    novice at all of this and am curious about how you financed your 
>    suspension.  

My reply, at the time was this:

"I do not have a strong recommendation for how you should obtain financing for
cryonic suspension, but I can tell you what I did.  I looked at the tables of
'death benefits' for whole and universal life policies of a couple of insurance
companies and wrote a small computer program to find how badly these policies
suffered from various rates of inflation.  When I saw that these particular
policies were not at all inflation-proof I switched to a (cheap) 10-year term
life policy (from The Midland) and a plan to invest my money and prepare a
trust within 10 years to replace my insurance policy.  This requires more work
and discipline than getting a universal (or whole life) policy.  I also have
to pay tax on my earnings (unless I buy only nontaxable investments).  But at
least I have control over my money and have the opportunity to do a lot better
financially than I would with universal (or whole life) insurance."

Since then I have reconsidered that approach, decided it was lacking, and
changed my insurance arrangements accordingly.  The problems with the above
approach are:
  (1) it depends on a reliable source of income
      In particular, if I become disabled and cannot work, my income would
      decrease and eventually disappear because the health coverage benefits
      are limited.  In contrast, an option available with life insurance, for
      a small additional fee, is "waiver of premium", which would enable me to
      continue my insurance coverage even if I become disabled and cannot pay
      the insurance premiums.
  (2) it depends on predictable expenses
      When preparing to get married, I discovered that my expenses are not
      as predictable (or as low) as before.
  (3) it depends on good investments
      I have other things to do besides spend my life studying investments.
      Making conservative, safe, inflation-resistant (and, hopefully, tax
      resistant) investments is difficult, if not self-contradictory.
      In contrast, life insurance policies often have an "inflation rider"
      option, available for a small extra charge, that may help provide
      safety from bursts of inflation.
  (4) term insurance has no cash value
      Universal, single premium, and whole life insurance policies have some
      cash value associated with them and eventually become completely paid
      up.  At that point no more payments are needed to maintain the "death
      benefit" needed to cover cryonic suspension.  Term insurance, on the
      other hand, not only costs more as I get older, the coverage also
      stops when my payments stop.
  (5) (lack of) peace of mind
      Worrying about finances is not only uncomfortable, but also unhealthy.
      A universal, single premium, or whole life insurance policy (with the
      waiver of premium and inflation rider options) significantly reduces
      my budget worries.

What other recommendations have any of you heard concerning life insurance
for covering cryonic suspension?  I know of one person who got a life
insurance policy from two different companies, each policy of which is large
enough to cover his suspension.  This has three advantages:
  (1) balancing the tradeoff between "death benefit" and cash value
  (2) providing a backup in case one insurance company goes bust, and
  (3) providing a backup in case one insurance company objects to paying
      a claim to a cryonics organization.
As for objections to paying the claim, I had my insurance company sign a form
saying that a cryonics organization does indeed have an insurable interest.
I can email a copy of the entire form to any of you who want one.
                                       - Kevin Q. Brown

Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=125