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Death Trap Ahead

Death bonds may sound like a good investment--but are they?

This story appears in the December 2007 issue of Entrepreneur. Subscribe »

When I started seeing articles last summer about something called death bonds, it took me back to the '90s when I was a personal finance columnist in Tampa, Florida, witnessing the tail end of the viatical settlement movement. Viaticals were contracts calling for an investor to pay part of a seller's life insurance policy upfront and wait to collect the full amount when that person died. Viaticals originally catered to AIDS patients but were later marketed to all sorts of terminally ill folks. The viatical business worked in theory, but in practice, it attracted shady characters and enough fraudulent behavior to keep a personal finance columnist busy for years.

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