How To Invest In Life Settlements
Tuesday, October 6, 2020
Section: Members

Investing in life settlements has recently gained popularity as more of the senior population has discovered the benefit of life settlements for themselves. It is a type of investment that benefits all parties involved due to its unique dynamic of profit and need, and it is an investment that offers some notable benefits for investors when compared to traditional investments in stocks or mutual funds. 
According to the 1911 ruling in the case of Grigsby vs. Russell, life insurance is viewed as an “owned commodity” and can thus be sold as such.

This means that a senior, usually over the age of 70, who decides that he or she no longer needs their life insurance, can sell it to a third party for a cash payment that can be used at their discretion. The third-party will then be responsible for the payment of the policy’s premiums and any other associated fees, but will also become the policy’s beneficiary once the person who is insured passes. 

Viatical settlements, which came about from the AIDS epidemic of the 1980s, are a similar type of settlement. While life settlements don’t require the individual to be terminal, viatical settlements allow terminally ill individuals to sell their policy for a payout that is equivalent to more than the cash surrender value - money that is generally used to fund hospital or hospice bills. 

The unique dynamic of investing in life settlements makes it particularly interesting for those looking for an alternative to the stock market or real estate. This is because, unlike traditional investments, investing in life settlements comes without any dependence on external factors such as the fluctuations of the stock market, interest rates, or politics, but rather offers a guaranteed fixed payout. 

The only significant variable that affects the profit of a life settlement investment is the remaining lifespan of the insured. The lump-sum payout at the time of their passing remains the same, but the length of time before settlement determines how much must be paid before this payout is received. Therefore, if the insured person lives years longer than was expected, the investor will pay that much longer and will gain less total profit. 

Only accredited investors are eligible to invest in life settlements, including banks, insurance companies, employee benefit plans, trusts, and qualifying individuals. Investing in life settlements is thus not the right choice for everyone, but is a small and profitable niche market for those who meet the qualifications and can afford to potentially be tied up in the investment for upwards of a decade. Furthermore, the delicate legal nature of investing in life settlements generally requires careful and professional management.

Life-settlements are a true win-win investment because they not only provide seniors with the money they desire for the remainder of their lives, but are then paid off through the life insurance policy’s final settlement. Although life settlements may not be the right investment choice for everyone, those who qualify and choose to invest in life settlements can reap the benefits of this niche market to become highly profitable with very little risk. To learn more about life settlements and network with the right individuals, become a member of LISA today.