Buzzword: Death bonds
Life is hard enough without having to decipher everything. Each week, Marketplace Money brings you a word or a phrase that has bubbled to the top of the news. For instance, "Death bonds." You hear it, you see it, but do you really know it?
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A rather "morbid" investment brings us this week's Marketplace Money buzzword: death bonds.
A death bond isn't a contract you sign with a hitman. It's a bond issued by . . . a life insurance company. You loan them your money. If the world's a safe place, and the company pays off very few claims, then you get the money back -- with interest! But if there are lots of claims, like after a catastrophy, then the company can use your loan to pay off policyholders -- and you might need some financial CPR.
Death bonds are one way to diversify a lifeless profolio. Though, unlike death itself, they're not for everyone.
