Life Settlements as an Investment
Life Settlements. This investment area has been around about 15 years and is becoming more mainstream every year. A life settlement is the purchase of an already existing life insurance policy. Many policy owners decide for one reason of another that they no longer need insurance coverage. In the past policy owners either pulled out the “cash value” of just let the policy lapse. Many are now selling them to willing investors who keep the policy in force until the original owner passes.
Let’s say you have a $1 million life insurance policy, you’re 70 with a life expectancy of 8 years. You’ve decided that you don’t need the policy anymore. An investor group, for example may pay you $300,000 for the policy.
You now have money to pay for living or medical expenses and generally make your financial life better. The investor will pay the policy premiums until you die, then receive the million dollars pay off for the $300, 000 (plus premiums) investments. The annualized returns can be quite high not to mention that it’s immune to the volatility of stocks, interest rates, inflation and terrorism.
The lesson to be learned is that alternative investments are available for those who want to diversify their portfolios; however, they should be fully understood before you invest in them.
Source: The Daily Independent
** This is different than the viatical fraud investments that were utilized a few years back.
