Have you ever wondered what happens to the policies that clients sell to life settlement brokers? Now they can be part of your client’s overall retirement plan.
Life settlements, Wall Street’s newest asset class, are quickly becoming the darling of independent financial and retirement planners, and for great reasons. Until recently, life settlements were strictly an institutional investment. Now, they can be offered to individuals as well as institutional investors, either as a whole policy or on a “fractionalized” basis. This simply means that an investor can own small pieces of many policies and be a beneficiary of each.
Life settlements are directly correlated to life expectancy. As it is inevitable that eventually everyone has to die, the payout of a life settlement is assured by nature and not by some random CEO. Life insurers have a 100 percent track record on the payout of death claims, and life insurance, one of the longest standing asset classes, will be the last asset standing in a financial doomsday scenario.
So what does this mean to your client? Along with unmatched safety, life settlements possess two investment attributes that all financial gurus are touting as indispensible in today’s financial environment–non-correlation and absolute returns. Furthermore, clients are seeking these very attributes in the midst of our current financial meltdown. First, returns from life settlements are not related to the stock market, bond market, interest rates, monetary issues, terrorism or global political events. Second, life settlements offer absolute returns. There is security in knowing, at the time of purchase, the exact dollar amount that your investment is going to return when it matures.
However, even with all of these advantages, and a nearly 20-year track record of double-digit returns, don’t expect prospects and clients to immediately beat a path to your door. It just sounds too good to be true.