A 78-year-old woman walks into an agent’s office to buy life insurance.

“Have you ever had cancer?” asks the agent. “Oh, yes, dear,” says the woman. “Breast cancer.”

“Do you have a family history of heart disease?” “Oh, yes, dear,” the woman says, nodding. “My father died of a massive heart attack in his 60s.”

“Do you have any history of mental illness?” prods the insurance man. “Oh, yes, dear,” she says. “I’ve been on bipolar meds for years!”

“Uh, okay. So how big a policy did you say you wanted?” he asks. “Twenty million dollars.”

“In that case,” says the agent, “yes, dear!”

My comment: The following few paragraphs are the start of a lengthy explanation that deals with the fact that people are living longer these days, and living longer means the next question is where will the money come from to pay for groceries, medical care, shelter, etc. Or do you want to die and get it over with. There’s also a great short video that summarizes the problem.

By Charles Passy

Call it the new death calculus: the 21st-century equation for determining human longevity. Or call it misguided guesswork, as some critics have. Either way, it’s hard to imagine a math problem that has flummoxed humanity for longer. (Actuaries, in fact, have been fumbling for an answer since 1583, when the first life insurance policy was issued.) And it’s even harder to conceive of one with more at stake in the outcome.

The dollar figure affected is so staggeringly enormous that it takes a while just to write out all the zeros. Start with $1.6 trillion, which is the amount currently invested in life insurance annuities — products typically tied to the longevity of the owner. Add another $6.5 trillion. That’s the amount in private and government pension plans, according to the Investment Company Institute. (Were the average U.S. life span to increase by just one year over current government projections, the country’s private pension systems — already struggling to keep pace after the recent market upheavals — would take a roughly $115 billion hit, based on data from Swiss Re, a prominent reinsurance firm, and ICI.)

Now throw in another $4.3 trillion (what Americans have in 401(k)s and other defined-contribution plans), plus $4.6 trillion (what we’ve saved in IRAs), plus $10.5 trillion (the face value of individual life insurance policies in force in the U.S.) and you begin to get a sense of the ante. Leaving aside the matter of Social Security — a 14-digit-dollar question of its own — the pool of money tied to the death calculus is somewhere on the order of $27 trillion.

Read the full article HERE…