FLS (or life settlements) have recently become an increasingly popular alternative asset class, especially in light of the recent mortgage meltdown, financial turmoil on Wall Street, and government bailouts. The life settlement market has rapidly grown into an $18 billion industry and is predicted by Bernstein Research to develop into a $150+ billion market in a few short years.
Mostly supported by institutional investors, a life settlement can also apply to individual participants at lower entry-level participation amounts.
Participating in a life settlement involves buying the beneficiary interest of a life insurance policy and receiving the payout of the death benefit. This would be like any beneficiary of a life insurance policy that receives the payout at maturity.
This excellent diversification vehicle also serves as a great defensive strategy, since the payout is not dependent on or affected by:
- a weak economy
- stock market volatilities
- interest rate fluctuations
- real estate and mortgage markets
- oil prices
- unexpected global events
- other traditional economic factors.
This unique opportunity is offered to qualified participants at a $25,000 minimum participation level. The structure enables participants to purchase a fractional-interest or percentage-share of the death benefit in a policy or policies. Participants may utilize non-qualified funds as well as qualified funds such as Pension or Profit-Sharing Plans, or most commonly, a self-directed IRA, to fund the participation. We only offer policies with insured(s) typically 65 years of age and older, who experience chronic or degenerative health conditions. In addition, only “non-contestable”, “permanent” forms of life insurance policies that have been issued by highly rated life insurance companies are considered.
When the participant purchases the beneficiary interest of a life insurance policy, the future payout is known upfront when the purchase is made. When policies mature, the payout amounts are fixed amounts paid in a lump sum. What is not known is the exact time that the policy will mature (demise of insured).
Although the time-frame for a single policy can never be predetermined, by offering a fractional interest in several policies, the participation structure provides the ability to diversify a relatively small participation across several policies. Given the fact that all policies will mature and payout will be received from the most financially sound insurance companies in the world, the participant can feel secure in his or her investment.
Ask an agent or rep at our agency about Fractional Life Settlements today!