Harry Gross: Questions about 'longevity insurance'

Dear Harry: I have never believed that "there's nothing new under the sun." Our insurance broker has come to us with what he described as a new concept in insurance called "longevity insurance." Since my wife and I have parents and aunts and uncles who have lived into their 90s, the broker said we should consider this new type of insurance. The way he described it, it sounds more like an annuity than insurance. What's the real scoop on this, Harry? Is it worth having? We are both 66, working full-time, and in good health. We have a total of $900,000 in pension plans and savings, and we intend to keep working at least until 70.

What Harry says: In this case, there is nothing new except the title. It's just a modification of the annuity concept. You and your wife are ideal candidates because of your genetic history. The intention is to make sure you are provided for if you live past the normal life expectancy. Your survivorship life expectancy is more than 19 years, but one of you will probably outlive that. The company will want either a large lump sum now, an annual premium until, say 85, or a combination. In return, you will get a stated amount starting at 85 that will continue as long as one of you remains alive. There are variations that the company can work out, but that's essentially the score. Consider your needs after you retire to be about 90 percent of what you're now spending (not earning). Consider a modest return on your $900,000 of, say 5 percent plus your Social Security to see if you'll be able to cover that 90 percent. If so, don't go for this at all. That's the way it looks to me. My guess is that you don't need it.

Write Harry Gross c/o the Daily News, 400 N. Broad St., Philadelphia, PA 19130. Harry urges all his readers to give blood - contact the American Red Cross at 800-GIVE LIFE.