The most common traditional places to put retirement funds or any other savings funds are banks (paying about 2-4% on CD’s), the stock market (which is very volatile lately and long term returns are difficult to predict due to the global economy being more interdependent)
So how does an investor whose goal is to earn the highest rate of return achieve his or her goal of rapid appreciation of their investment? After all, 2-5% barely keeps you breaking even when inflation is taken into consideration. Is there any other alternative available?
Yes. And you won’t hear about it from your banker who wants to pay you 2-4% on your money. You won’t hear about it from your stock broker who wants your money in the market. You won’t hear about it from your life insurance agent who wants to lock it up in a long term annuity.
Welcome to life settlements. Simply put, a Life Settlement is the sale of an existing life insurance policy that no longer meets the needs of the insured individual. The policies are purchased from ‘A’ rated (or better) legal reserve life insurance companies. Life settlements have been around since the early 1900’s, however, have only recently became available to the accredited individual investor.
Life Partners Holding, Inc. is the only publicly traded life settlements company in the U.S.. The average annualized ROI on actual payouts for the history of the company thru June 1, 2006 have been consistently above average year in and year out. The returns for investors are not affected at all by interest rates or stock market volatility. Time is the only factor that affects the return on the investment. The average policy matures in approximately 36 to 42 months.
In fact, The Wall Street Journal states…
(Wednesday, May 18, 2005 – Wall Street Journal): “The industry’s annual returns of 10% to 15% first attracted European and Asian investors. And a few years ago, Berkshire Hathaway Inc., the investment vehicle of billionaire investor Warren Buffet, began buying life settlements and recorded an investment by the end of 2004 of $207 million”. It is believed that Warren Buffet is the biggest individual investor in Life Settlements today.
Life settlement investments are not for everyone. A minimum of $50,000 investment is required and the investment amount is recommended to be divided into 5-10 different policies to diversify the risk portfolio. And the funds are a ‘buy and hold’ investment. The funds are tied up until the policy matures (average 36 to 42 months). Qualified or Non-Qualified funds can be invested. In fact, the majority of invested funds are IRA’s, 401K’s and other similar Qualified funds.
The only reason that people are not getting above average returns on their investments is simply the lack of knowledge on where to find it. Despite the lack of exposure, life settlements are becoming more known in the investment community due to their safety, regulation, and above average returns rarely found in today’s market.
For more information about life settlements, feel free to contact Todd Fuller via email at lifesettlements@
