"Death Bonds" for Better End-Of-Life Quality?

There's an article in the recent issue of Canadian Business (Volume 83, Issue 8, 11-24 May, 2010) titled Dead Set Against It? "Death Bonds" are a macabre business. But is sound moral judgment or a bad rapy keeping them out of Canada? written by Greg Hudson.

As the article suggested: "Death Bond" might sound like the title of a Charles Bronson moive, but in fact, it's the name of a legitimate financial product in the U.S. and pockets of Canada, other referred to more euphemistically as a "life settlement." Depending on who you ask, the idea of a secondary life insurance market is either a godsend in troubled times or another example of the grotesque depths to which people will stoop to make a buck.

The idea is to allow life insurance policy owner to sell forward (i.e. to sell the policy to someone before his/her own death) so that he/she can have the cash (again before his/her own death) for whatever reason. Of course, everything comes with a cost and sometime can make things more complicated as the beneficiary in this case will clearly be different than the one originally assigned. On the other hand, I personally see a clear advantage of this "selling forward" is that the policy owner can actually enjoy his/her own policy, be it for a stressful financial reason, be it for a selfish life enjoyment expenditure item.

I would actually urge the government to work with the insurance industry to make this "Death Bonds" or "Life Settlement" policy more transparent and more favorable/fair to the consumers. The situation is like death today, the general public and community members are reluctant to openly discuss these topic, as a result, this "business" is kept within a small group of people. You can imagine that the less people know, the less knowledge they acquired and therefore the worse position they are in to protect/achieve for themselves. Imagine that if a consumer can gain 10-20% more cash value in selling their life insurance policy forward, assuming for a U$500,000 policy, it is like a positive gain of U$50,000 to U$100,000. Wow! A lot of things can be done with this amount of money.