How Smart People Like You Fund Cryopreservation

Is term-life insurance (and invest the difference) a safe approach?

INTRODUCTION AND EXECUTIVE SUMMARY

May I ask you a question?  On a scale of 1 to 10, how serious are you about your cryopreservation arrangements?

If you answered this question with a number over 5, then this article is for you.  While cryonics is arguably one of the best ideas humans have ever developed, there is a wide range of things that could go wrong.  Charles Platt outlined 70 of these items in a recent article for the Biostasis Standard.

The purpose of this article is to make as certain as we can be that the FUNDING component is not the limiting factor that keeps you from seeing the amazing future that is ahead for humanity.  You want to be a part of that future, which is why you have some level of interest in the emerging science of cryonics.  

Included in this article are:

1. How the concept of life insurance makes cryonics accessible to the masses.

2. A compelling narrative of why permanent policies make sense for cryonics funding, including the concept of the "Paid Up" policy.

3. Why well-informed, wealthy, people own large permanent policies.

4. Some very personal history about Rudi Hoffman I hope you will find fun and interesting.

CONCEPT ONE:  THE FINANCIAL LEVERAGE OF LIFE INSURANCE DEMOCRATIZES CRYONICS

As a fully signed cryonicist since 1994 and the author of "The Affordable Immortal: Maybe You CAN Beat Death and Taxes", THE book about funding cryonics, I must share with you one of my pet peeves.  One that makes me cringe and holler and mad as heck. 

About 90% of the humans signed up for cryonics use the technology and leverage of life insurance to make this a more affordable option.  And yet, most news reporting and articles on the topic of cryonics don't mention this hugely impactful fact!  They much prefer the shock value of reporting how crazy it is that people would spend $200,000 on misguided, delusional quackery.  Explaining that most people signed up for cryonics enable their funding through a policy costing perhaps $50 to $400 monthly is a critical part of the cryonics story, but often is mentioned as an afterthought or left out of the discussion entirely.

Even scholarly and academic discussions about cryonics often neglect to deal with the financial accessibility component of cryonics. I respectfully suggest that any discussion on the advisability of cryonics MUST explain how the technology of life insurance makes cryonics affordable for middle-income earners.  And this vital and central point needs to be made at the very outset of the discussion.  Not bringing out this paradigm-shifting fact is a disservice to cryonics and public understanding of this emerging science.  What a classic case of "Burying the Lead" (and worse, maybe burying the ill-informed reader!)

With over 2,000 cryonics clients that our office has worked with since 1994, I can confidently report that most fully signed and solidly funded cryonicists are NOT among the mega-wealthy.  Instead, they use the financial leverage of life insurance or annuities to create a large sum to cover the cost of cryopreservation.  

There are at least TWO major issues keeping cryonics from catching on even among the early adopting, scientifically oriented, forward-thinking masses.  While most people would speculate the first issue is "We can't prove cryonics will work, the technology is not proven" as the primary factor, I propose a different factor.

It is the perceived cost!  Cryonics is widely considered to be out of the financial reach of "normal" humans.  

I am proud to say I have clients who literally stack the shelves at Walmart, clients who are baristas at coffee shops, clients who are mid-level software engineers, and lots of clients who are creating the future in AI, AGI, and robotics.  What many of these people have in common is that their net worth and income are not in the millions of dollars. 

The headlines should read "BREAKING NEWS!  New Medical Technology and New Financial Technology Join to Create Scientific Life Extension for the Masses!"   The confluence of these two technologies, one medical and the other financial, means that people like you and I can be a part of the Grand Experiment called cryonics. But, I would not recommend holding your breath until you see this headline.    

CONCEPT TWO:  PERMANENT POLICIES AND TERM POLICIES

There are two basic categories of life insurance, "Term" and "Permanent."  Term, as the name implies, is insurance for a fixed period of time (“term”).  Permanent policies, including Whole Life, Universal Life, and Index Universal Life, are designed to be in place for life.  Generally, the illustrations on permanent policies show the policy providing benefits to and even past age 120.

In the early years, especially before age 35, term life insurance is in the short term cheaper than Whole Life, Universal Life, or Index Universal Life.  And to be fair, term life insurance is a perfect solution for many reasons people to buy life insurance. Let's take a look at one of these more traditional reasons to obtain term life insurance. 

If you are buying life insurance to replace the income your family will lose if you are not around, a 20-year level term may be exactly what makes sense.  Yesterday, as I write these words, our office obtained approval on policies for a husband and wife, each of whom earn about $100,000 a year.  To provide for their family should either of them die, they each applied and qualified for a million-dollar twenty-year level term.  This is reasonable, as $1 million at a 10% growth or drawdown rate is $100,000.  For this family and this purpose, an upgradeable 20-year level term is the right tool for this particular objective. 

So, as an engaged reader, you may ask, "If term may be perfect for family protection or generating a lump sum to pay off a mortgage, Rudi, why is it not perfect for cryonics?"

Well, let's look at the facts.  Raising a family or paying off a mortgage are tasks (joys?) with a definite endpoint.  The need...the VERY PURPOSE for the coverage decreases over time, and eventually goes away.

In contrast, there are two areas of life in which your need for coverage not only does go away but actually increases with time and inflation.  One of these is called "Estate Planning" in which the leverage of life insurance is used to equalize inheritance or pay estate taxes.

And, the other is funding for your potentially life-saving, MISSION CRITICAL, cryopreservation funding!  For these purposes, the requirements for a plan to create a tax free, creditor protected leveraged lump sum, actually INCREASE over time.

CONCEPT THREE:  EVERYONE HAS A BACKSTORY. HERE IS MINE.

I was teaching school in 1978, and a fellow teacher showed me a "buy term and invest the difference" illustration that was enormously compelling to me.  Although I was making only $6,200 a year at the time, I still had a Whole Life policy I had bought primarily for the long-term savings component.  A different teacher had sold this to me earlier, explaining that I needed both a disciplined, automatic way to "pay myself first” as well as a life insurance policy.  

The comparison illustration, projecting growth outside the life insurance in a (now illegal to project) mutual fund growth rate of 12%, compounded the outside account to over $200,000 at my age 66!  (Which, ironically, is my age as I write this.)  "Rudi, if you can have the cash, you don't need the life insurance!" explained this new teacher.  The concept of compounding even the teeny amounts I had to work with at higher growth rates, and the "Rule of 72", as it was explained to me, opened a whole new world, and wound up dramatically changing my life and career.

To make a long story short, I was recruited into the life insurance and mutual fund industries, something I thought I would never do, chanting the mantra "Buy term and invest the difference" (BTID) and replacing older obsolete "Whole Life" policies. That was 45 years ago as I write these words.

I studied and learned everything I could get my hands on about business, investing, taxes, and success practices.  I struggled and barely eked out a living for many years, but I was obsessed with trying to figure out what was REAL in business, life, and finance.  With my house payment months in arrears, and my utilities periodically shut off, I was literally living on peanut butter and trying to figure out how to put gas in my car for the next appointment.  I was the opposite of overnight financial success.

I paid my dues as an entrepreneur for literally decades, searching desperately for the keys to the kingdom of  prosperity while piling my expenses onto credit cards to survive.  I would drive pretty much anywhere to go to training meetings to see someone successful in my business. 

I would drive ten hours to go to a conference, listen to business tapes every second of my car time, and sleep in my car or around the hotel pool because I couldn't afford a room at the event hotel.  I was working like crazy, studying self-improvement literature like a madman, worried all the time, terrified of failure, but somehow still fully committed to growing into somebody I could be proud of. 

We all have our backstory, and it is a good bet that you have “paid your dues” somewhere as well for your accomplishments in life.  Thanks for reading mine.

Rather fortunately, some good things finally happened in my life and career.  I am humbled to tell you that it took much longer than I thought, but eventually that compounding curve turns up, in both finance and character development. 

I became a Vice President of the company that recruited me.  In the 1980s, it was my job and my obsession to recruit people into this "buy term and invest in mutual funds" company, so I completely understand the concept, theory, and actual practice of BTID.  And, after 15 years in management, I became a self-employed independent broker/consultant/broker (yeah, read "salesman") and continued to "fail forward." 

CONCEPT FOUR:  WHY DO WEALTHY AND INFORMED PEOPLE OWN PERMANENT LIFE INSURANCE?

So, why do wealthy people, high level advisors, and cryonics organizations recommend some form of PERMANENT life insurance?  The research done by mathematician David McNight documents that 85 % of Fortune 500 CEOs have a "Private Pension Account, " a Corporate Permanent Life Insurance policy.  In his highly recommended book "The Power of Zero” McKnight explains why these very intelligent, highly educated, people with access to the best advisors on the planet own permanent life insurance policies. 

These reasons include the SAFETY and CERTAINTY of the cash values as well as the death benefit of life insurance policies.  The CREDITOR PROTECTION and TAX-FREE GROWTH of the cash values under a life insurance policy are also compelling reasons.  And, perhaps most importantly, the absolute certainty that a lump sum of money will go exactly as they direct it without reducing the rest of their estate!  

Do these CEOs of the world’s largest companies understand the "opportunity cost" of investing in a life insurance policy?  Of course, they do!  But when the full picture is understood, the opportunity costs (the other uses you could do with the funds) fall short.  The CHANCE of higher growth elsewhere is superseded by the CERTAINTY that the life insurance will do the mission-critical specific task it is designed to do. 

As a Certified Financial Planner ™ I don’t have all my long term savings in any one concept, and neither should you.

Despite the simple mantra which was almost a religion to me in my first ten years as a broker: "Term insurance is always the answer", I gradually realized I was only seeing a small piece of the full picture.

Just like the blind men being certain of their analysis as they grasp only parts of an elephant, there were other components of the life insurance story I was rather embarrassingly ignorant of.  Reasons which my later education as a comprehensive Certified Financial Planner made clear.  And, the entire life insurance industry, which before the 1970s had sold the same product for a hundred years, became much more competitive and innovative during the 1980s.  The times, the products, and my own level of comprehension all changed during my third decade in the financial planning industry.

I also discovered research like the Penn State study showing that 99% of term policies do not wind up paying out a death benefit as shown here: https://www.entrepreneur.com/money-finance/is-this-the-worst-financial-advice-ever/310731

The newer Universal Life and Index Universal Life policies are an exquisitely packaged combination of term insurance and cash growth account.  They have a lower internal cost of the life insurance component for the client than he can buy independently - and with an internal side fund.  As a consequence, these policies enable better long-term growth than most humans actually achieve in the real world of investing. 

BEHAVIORAL FINANCE AND YOU

Modern policies have a track record of successful outcomes for the client in the real world of uncertainty, risk, and an economic field called "behavioral finance" (what people actually do, not what they ideally ought to do).   

Investing in a cash value building policy provides incentives that force us to think and act long range.

One of the reasons these policies are terrific in the long term is they are terribly bad investments in the early years due to set up costs.  But we are long term players, right?  You want your “future self” decades from now to admire the perspicacity you are showing today. 

You don't own a permanent policy for what it can do two years from now, but TWENTY and THIRTY years from now.  And for what it will do on that unknown day in the future when your faithful heart stops beating, and your cryopreservation experts are by your side to send you on your ambulance ride to the future.  

Perhaps more importantly for cryonics funding, the Index UL policy cash value growth enables the policy to become PAID UP.  This term, a "PAID UP POLICY" simply means that the policy stays in place forever, without ANY further premiums.  Read on to see why this can be literally "life or death" important.

THE MORAL OF THE STORY

All of us live in the real world and are subject to the sub-optimal outcomes created by the unexpected.  The Universe is a dangerous, chaotic place to be, and even people who have literally hundreds of millions can lose these.  Or have them tied up.  Or want to take care of those they love by not redirecting the future cost of cryonics, which could be over one million dollars, from their heirs.  Or heirs who will contest the funds going for cryonics, as they see the cash to fund cryonics as a TARGET. 

Life insurance proceeds supersede ALL these problems.  Especially if the policy is PAID UP and does not need another thought to quietly do its lifesaving job.  Insurance and annuity proceeds are outside of probate, outside of the estate, and not available to ANYONE who may wish to second-guess your cryonics ambulance ride to the future.  

Life insurance and some special annuities have some unique characteristics that make them perfect for cryonics funding. 

ARE WE ABOVE THE STATISTICAL NORMS OR ARE WE PART OF THE NORMS?

Cryonicists as a group, and I include myself in this demographic, tend to be long-term optimists about their own future.  This may be a helpful attitude in general, but it also encourages us to believe that "the rules, normal statistics, and human condition averages don't really apply to me."

Let me be more explicit with an example.  Joe is a twenty-five-year-old paying 30 bucks a month on a cryonics term policy instead of 80 a month on a Permanent Index Universal Life.  Joe's thinking is as follows: "Well, I'll have so much extra money with my saved funds that I'll just pay cash for my cryopreservation."  (I wish I had a nickel for every time I heard this thought, in various levels of cockiness and certitude, particularly from Millennials in fast-track careers.)

Joe is wrong, for several reasons. 

1.  Assuming a 7% tax-free return, Joe's 50 dollars monthly difference compounds to $61,001 in thirty years.  BUT, if you have a twenty-year term, your premium increases dramatically and continues to go up every year at renewal.  Everyone knows that "term premiums rise at the end of the term."  But few are prepared or really understand the EXTENT of this premium increase, which can be 10 to 50 times the initial premium. So, all the extra side funds go away.  In direct contrast, most of the Index UL policies used for cryonics will be PAID UP in about 20 years and are over-engineered to be in place in the later years people actually NEED the coverage.

2.  And that 61,000 is likely to be totally inadequate for your future cryonics costs.  To think otherwise is to ignore the costs of technical improvements and the reality of inflation.  Sorry, Joe, but we need to look at this again with a long-term perspective.  

3. Joe is “smart” and takes out a term-life policy and “invests the difference.” Let’s assume that Joe has this kind of discipline and ends up with an adequate amount of money in the bank. Does this automatically provide cryonics funding? No! At some point Joe needs to withdraw this money and/or sell these investments and make a pre-payment to the cryonics organization. Given the fact that Joe is on the high road to “longevity escape velocity”, he feels the time is not quite right yet to do this. Or Joe wants to sit out this bear market before cashing out for cryonics. Or, worse, he will make sure this money will be available to the cryonics organization…when he makes time to execute the proper paperwork etc. I think you get the idea…Joe is financially smart but never gets to putting adequate and secure funding in place.  This scenario would have been prevented with a more simple and secure whole-life / universal approach.

4.  There are other externalities and psychological issues involved we could delve into regarding what happens to our enthusiasm for life as we age.  I know, this won't happen to you because "You are just special".  And you are jumping on the age reversal train as well.  I know this is how you feel, because I am part of this community and I feel that way about both of these things.  However, because I understand "the easiest person to fool is ourselves" I also own several large policies.  And we are consistently stuffing enough funds into them to get these policies in the PAID-UP status, to make sure they will be in place without ANY payments once they hit that magical "escape velocity" point.  Not because I have no alternatives for investment, but because these policies are the FOUNDATION of our multi-million financial plan.  

This is how smart people like you fund their cryopreservation. 

ADEQUATE AND SECURE CRYONICS FUNDING: IS YOURS GOOD ENOUGH?

Dr. Jerry Lemler was the President / CEO of Alcor from 2001 to 2003. Jerry became a personal friend, mostly when he stayed at our modest home for three days here in Port Orange while he and I were putting on some cryonics social events in central Florida.  Jerry had been a Medical Doctor before developing a group of (I think about eight) weight loss clinics and was just an entertaining and charming man.  He loved an occasional cigar, so Jerry and I were consigned to our back porch for most of our long conversations.  Jerry was the President of Alcor during the eventful year 2002, when one of Alcor's most famous and controversial cryopreservations occurred, that of Ted Williams on July 5, 2002.  Jerry loved life and had fascinating stories about the inner workings of Alcor, the backstory on Ted Williams, and the future of Alcor and cryonics as an emerging science. He was likeable, well-read, jovial, and genuinely kind.  

Jerry had an Alcor funding life insurance policy with me, not a term policy, but a Universal Life in which the premiums did not rise in the later years but still required payment to continue the policy.  He was paying about 80 bucks a month for a $50,000 policy, as he was signed up for neuro-cryopreservation at Alcor, and 50k was sufficient at that time. (Whoops, did you catch that mistake?  No extra funding for future cost increases...good catch if you saw it.) 

Fast forward a few years later.  Jerry has left the CEO position at Alcor and has a new wife and medical practice.  But now he has both cardiovascular and cancer problems.  His new wife is quite skeptical of cryonics. Indeed, to say she is not remotely supportive would be putting it rather too kindly.

And every month she is reminded of Jerry's foolish cryonics arrangements when she reconciles their bank statements.  A successful MD and entrepreneur, Jerry has had millions flow through his hands.  Yet these 80 dollars a month is an issue that will have dire consequences in Jerry's future.  (Another weird but very true catch for those paying attention and keeping score...even wealthy people...and their families...care about seemingly TRIVIAL amounts of money and other idiosyncratic weird things.)

One day I got a call from Jerry.  He sounds weak, his voice is raspy, and it is difficult to make out what he is saying.  I finally parse that he is quite sick with cancer, has been in and out of the hospital, feels really awful most of the time, and his wife has convinced him to drop his Alcor policy. The following is an approximate retelling, not verbatim but not far from it.  The last conversation I will ever have with my friend Jerry.  

"Jerry!  What the hell?" Or words to that effect emerge from my lips. "Dropping your life insurance policy when you are very sick is the worst thing you can do!  Even if you change your mind, I won't be able to get you any coverage with your recent cancer."  

"Well, Rudi, my wife doesn't like those 80 dollars payment, and it causes problems every month."

"Jerry my friend, I simply will not do this.  You can call the insurance company directly if you choose, but I will not be a part of this."

"Ok, I understand, Rudi.  But this is something I just have to do to maintain a happy home life."

We said our goodbyes, and to his credit, I think Jerry understood my unwillingness to torpedo his anticipated cryonics arrangements.  But he DID drop his policy, and he DID die, without cryopreservation 3 weeks later.

So, to makes things even more “demanding”, you do not only need the right kind of funding, but you should also make sure that this funding is protected and that you protect yourself against it being raided and ending up DEAD (in the information-theoretic sense of the word) after all. If Jerry’s policy had been “PAID UP” it would been less visible as a source of money to tap, but he still would have been vulnerable to people hostile towards his cryonics arrangements.

FINAL CONCLUSION

Owning and solidly funding a permanent form of life insurance like an Index Universal Life with a cryonics friendly life insurance carrier is almost certainly your most rational and brilliant way to fund cryopreservation.  Term insurance is not - unless you are putting it in place while working on a better whole-term policy upgrade. In fact, newer and better term policies do enable you to UPGRADE your term to a permanent policy without underwriting.  If you do have an upgradeable term, you will certainly want to upgrade this to a permanent policy to solidify your cryonics funding when you can do this.

Optimization is good in some areas in life, but you do not want to make your cryonics arrangements a gamble and timing issue. A realistic life insurance policy (or several) that ENSURES you will be cryopreserved is a fundamental component of a sensible life extension plan.

Thank you for your kind attention.  I can be reached for comments at rudi@rudihoffman.com.