Last week, Business Week profiled "death bonds," which are formally called life settlement-backed securities, which work like this:
- People who own life insurance can sell their policies to investors, getting an instant payment as much as 40 percent of the value of their policy.
- The investors pay the monthly premiums until the sellers die.
- Once the sellers are dead, the investors collect the full payouts.
As you can see, college endowments will grow if a bunch of people die earlier than expected.