Dallas, Texas (PRWEB) July 29, 2011
Life Settlements, America’s newest asset-class since REITS, are becoming an ever increasing highly sought after investment for mid to high net-worth individuals, reports American Safe Retirements. The recent volatility of the stock market combined with the globalization of financial markets, has created fear among investors. How connected are the worlds finances when, a crisis in Greece, Ireland or Portugal can trigger huge swings in our markets. Investments in Life Settlements are immune from geopolitical events, oil prices, stocks, bonds and interest rates.
A Life Settlement is the life insurance policy of an older person who no longer need or can afford this policy. This policy is typically brokered to providers who intern seek qualified investors to buy the policy. Upon the passing of the insured, the investor receives the death benefit. Life settlements have been in existence for many years but primarily dominated by large institutional investors. In recent years however, due to their stability and lack of correlation to global markets, Direct Fractional Offerings (DFO’s) in Life Settlements have found its place among high net-worth individuals and families.
What are the key aspects of this investment that one should consider? All things aside, when investing in life settlements, one is really investing in a Legal Reserve Life Insurance Company. Therefore, the question to really ask is, when considering to purchase a life insurance policy today, would there be a concerns in the inability of that insurance company (Legal Reserve) to pay out the death benefit to the beneficiary upon passing away?
Before rushing to answer this question, consider this excerpt on ‘financial clout’ taken from Gordon Williamson’s book ‘Getting Started with Annuities’.
There are over two thousand different life insurance companies in the United States. Collectively, the Insurance industry of North America owns controls, or manages more assets than all of the banks or oil companies in the world combined.
During the Great Depression, it was not the government that bailed out the banking industry, it was the US insurance companies. If there were ever a financial collapse in this nation, the insurance industry would be next to last, second only to the government, to fold. This is only true because the government has taxing power and the ability to print money. If the Insurance industry were ever to collapse we would look back at the Great Depression as a walk in the park.
Investors in Life Settlements are investing in a secure discounted insurance benefit. In return, the investor receives an excellent performance on his investment when the policy matures. Historic returns have ranged between 6 - 14% or higher if the right amount diversification is applied to the investment.
According to Rich DePaolo President of American Safe Retirements, "Life Settlements are poised for take off due to the current debt crisis". Mr. Depaolo confirmed that "the recent upset of the American economy's debt ceiling crisis with possible spin-off to another downward spiral of the market, has caused our agents to look for more alternative investment strategies for client funds taken from the volatile market, Life Settlements gives the perfect alternative for a portion of their client's portfolio." He went on to say that "liquidity must also be considered before investing in Life Settlements. An Investor should be prepared to hold for up to 8 years and may have to make additional premium payments if the insured outlives the initial premiums that were placed in Escrow. These additional payments will obviously decrease the return on that particular policy, which is why diversification is key to a successful portfolio.
In conclusion, Investing in Life Settlements is perfect for a portion of every mid to high net-worth investor’s portfolio. An investor is viewed as a humanitarian by the seller of a policy because his investment has allowed a member of Americas greatest generation to liquify an asset at a point in life when other options are limited. In return, the investor has the comfort of not having to mentally deal with the volatility of the market and yet still realistically receive a 6 - 14% return.