From AIDS-era viatical deals to Wall Street's multibillion-dollar death-settlement market

A recent Planet Money episode explores the origins of the life-settlement market, starting with a cancer patient who learned he could turn his policy into an asset. The Supreme Court’s 1911 ruling allowed policyholders to sell their contracts, laying the groundwork for later transactions. During the late 1980s, AIDS patients, unable to afford premiums, entered informal agreements to keep policies active in exchange for future payouts.

These early deals expanded into a formal viatical settlement business, which later pivoted to serving affluent retirees. Wall Street firms, seeking stable returns, began buying large blocks of policies and even packaging them into securities dubbed death bonds. The industry now operates as a multibillion-dollar market, with investors betting on the timing of policyholder deaths.