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How would you like to put your money in a place where it could potentially earn double-digit returns annually with NO stock market risk?
Sound too good to be true? Well, it's not!
For many years, the ultra-rich and institutional investors have known and used Life Settlements to provide safe, fixed returns on their money withOUT exposure to stock market risk. In fact, Warren Buffett has placed over $600 million in Life Settlements!
Now, due to changes in the financial marketplace, you, too, may be able to use these safe money vehicles to safely accumulate wealth with no risk of the volatility of the stock market.
What are Life Settlements?
The owner of a cash value life insurance policy can surrender the policy back to the originating insurance company if and when the owner no longer wants the policy. This has always been a benefit of owning a cash value life insurance policy. The surrender value for a policy is set by the insurance company, and it is a "take it or leave it" offer.
In 1911, the U.S. Supreme Court ruled in Grigsby vs Russell that life insurance policies are private property that can be bought and sold. This opened the door for policy owners to sell their policies to whomever they choose, often for more money than the surrender value offered by the insurance company.
A Life Settlement is a transaction in which the policy owner sells all interest in the policy to a third party - someone other than the original insurance company. The policy owner receives a cash offer and settlement and transfers ownership to the buyer. The buyer assumes all premium payments and maintains the policy until it "matures" when the insured passes.
Life Settlements have become more popular and more mainstream due to the convulsions of the economy and their adverse impact on retirement assets. As a large segment of the population is aging and requiring more long term care, diminshed assets have been available to pay for the soaring costs associated with this care. In many cases, life insurance policies which were purchased to pay for estate taxes are no longer needed due to changes in estate tax rules.
What are Life Shares?
In 2000, California State Senate Bill 1837 was enacted which put into place regulations for the sale of Life Settlements, putting California in the forefront for protecting buyers of Life Settlements and providing for fractional interests in these policies. As a result, an average investor can purchase a fractional interest in a Life Settlement rather than purchasing an entire policy. These fractional shares are called Life Shares.
What was an asset class available only to the ultra-rich and institutional investors has now been made available to accredited investors and self-directed qualified retirement plans.
Because Life Shares represent fractionalized ownership in cash value insurance policies, they are not subject to fluctuations of the stock market. When a Life Share is purchased, a fixed return is paid (usually about 12% annually) when the policy matures, and the underlying insurance policy is underwritten by some of the most financially secure companies in the world. Only policies underwritten by investment grade companies are accepted for Life Shares. Many investors welcome the chance to earn potential double-digit returns without stock market risk.
The payout of a life settlement transaction is not impacted by stock market volatility, interest rate fluctations, variations in the economy, or foreign instability. The factors that do affect life settlement payouts are few, and they are considered very carefully for each policy before it is offered to a participant.
An insurance company can contest the payment for death benefits. This time period is usually up to 2 years after the policy is purchased. The policies we offer are at least 2 years old.
No one can predict exactly when the insured will pass away and the policy will mature. Because the exact date of maturity is the single factor that determines the effective annual rate of return, the shorter the longevity of the insured, the higher the effective annual rate of return. In contrast, the longer the longevity of the insured, the lower the effective annual rate of return. This risk is mitigated through utilizing multiple life expectancy actuaries, selecting plicies in an older insured age range, and basing the payout on a known factor which is the face amount of the plicy.
While every attempt is made to provide an accurate assessment of life expectancy, a purchaser should anticipate the risk that a single policy could take 10 or more years to mature. The primary risk of life settlements is time.
Call us for more details and see how you may qualify for this asset class!