Alternative Asset Class
Life settlement investing provides investors opportunity to generate long term capital growth by exiting the volatility of existing financial markets in favor of a non-correlated asset class directly tied to the Baby Boomer population. Volatile markets, speculative bubbles and high frequency trading have caused many investors to flee stock and bond markets searching for alternative investments which generate long term solid returns and capital growth. An investment model suitable to both individual investors and larger institutions.
Long Term Capital Growth
Life Settlement investments seek to grow capital over long periods of time, upwards of 8 to 12 years and are not associated with Viatical settlements where the insured has a terminal illness. Life Settlement investments consider an insured’s health as part of analysis, however, health is only one component to a much more sophisticated investment equation. In many cases, the financial parameters of a case allow investors to acquire a life settlement without medical records because the investment cost are considerably lower than the national longevity expectation. Therefore, while medical condition is a consideration, it is secondary to the investment potential of the life insurance contract being considered.
Alternative investments provides portfolio diversification.
Non-correlated to traditional financial markets and asset classes.
Future investment return known upfront eliminating volatility.
High “A” grade investments backed by life insurance companies like MetLife, John Hancock, Lincoln Financial.
Provides an excellent hedge against traditional investment models and asset classes.
Investors have traded billions of dollars of life settlements over the last 20 years. The current Life Settlement investment market exceeds $30 billion and will expand to over $150 billion over the next decade. Life Settlement provides investors with very distinct portfolio diversification options while maintaining low volatility in a non-correlated asset class.
Investors approach to Life Settlement
Investors looking to expand into life settlement have a variety of options when adding to their portfolio. Life settlement investments typically take either a deterministic or probabilities approach to investing. Deterministic approaches typically rely upon 3rd party medical evaluations to establish a longevity model based upon the insureds health condition and lifestyle. Probabilistic approaches seek to optimize acquisition cost and premium maintenance requirements against standard population longevity models such as social security mortality tables. Both approaches provide flexibility of time horizon and capital requirements and can be combined to solve very flexible investment scenarios.
The first rule of Life Settlement investing is realizing a scientific approach toward policy acquisition and maintenance cost balanced against very predictable longevity models to yield a long term investment strategy. Life Settlement investing is not speculative but rather a well defined investment model based on longevity and known maintenance capital cost.
As traditional financial markets experience bubbles, excessive volatility and speculative gamblers, the Life Settlement market continues to grow as investors seek stability among turbulence.