Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It only takes a minute to sign up.
Sign up to join this community
So if you die the provider gets x amount from your estate but the provider pays you while you live?
For arguments sake say I had a 1% chance to die in a given year I get £100 that year from a reverse insurance provider but if die in that year the reverse insurance provider gets £10'000 from my estate?
Yes, that's called an annuity.
You give them your money, and they pay you a lifelong monthly or annual payment. Of course, they want the money upfront, otherwise you could die and have nothing left.
To expand on Aganju's answer, what you are describing is closer to a lifetime mortgage + annuity.
With an annuity, you pay an upfront lump sum amount to purchase a guaranteed future income until your death. This is very much the reverse of a typical life insurance contract (term assurance) because it insures you against living too long (i.e. becoming destitute in old age).
A lifetime mortgage (also called equity release) is a way to unlock the value in your assets (i.e. your home) which will be repaid on your death (or sometimes when you need long term care). If you take out a lifetime mortgage, the insurer will make a lump sum payout now and will recoup the value (plus interest) from the property that the mortgage is secured against. This isn't exactly the same as taking it from your estate but it's functionally very similar.
So, if you took out a lifetime mortgage and used this to buy an annuity you would pay nothing immediately, the insurer would pay you a fixed amount for every year that you lived and when you died (or entered long term care) the insurer would claim the original lump sum (plus interest) from the value of your property.
Obviously nothing I'm saying here is meant to imply that this is a sensible thing to do, but I think it's pretty close to what you are asking.
Lifetime mortgage: https://www.moneyadviceservice.org.uk/en/articles/lifetime-mortgage
If you aren't constrained to idea of an estate but are attempting to describe an investment vehicle that would profit upon your death, I believe the closest thing would be the viatical settlement, as alluded to by @user662852.
The idea is that if somebody with a terminal illness say, has to afford treatments, they can sell their life insurance policy to a third party for less than the total awarded amount (i.e. so the third party can make a profit). In exchange, this third party will award proceeds as long as the ill member is still alive.
The longer the ill member is alive, the more money the third party will have to pay, and the less profit they incur.
Important thing to note, you do not have to be facing a terminal illness to sell life insurance policies in exchange for a viatical. However, any awarded amount is of course, taxable. :)
I am told that in France (or maybe just Paris) house purchases are often done this way.
If a person, usually an elderly person, wants to turn their home into an annuity, they find a willing buyer, and a contract is set up like this: a. Buyer pays a monthly annuity until the seller dies. b. When the seller dies, the buyer gets the home. c. Seller can live in the home until they die. d. If the buyer stops paying the monthly annuity, the contract is cancelled and the seller keeps the money paid so far.
Works exactly as you asked for. Obviously when you buy a house from a 60 year old, they could die at 61, they could die at 100. Very risky for an individual buyer, but quite reasonable for an insurance company with good mathematicians. Good for the seller as well, but bad for their heirs.
