Senior Life Settlements Defined A senior life settlement is simply the sale of an existing life insurance policy by a high net worth, health impaired and/or elderly person (usually over 78 years old and has a life expectancy of 2-4 years, 3-5 years or 5-7 years) to another party. The price of the policy is negotiated and sold by the owner at a discount to the face amount. The purchaser then collects the full amount paid out under the policy when the policy matures. This concept is attractive to policy holders because they provide a secondary market for life insurance policies that are no longer needed, wanted or have become unaffordable. Seniors like this because it gives them a LIVINGBENEFIT they can use now for any reason whether for health reasons, putting grandchildren through college, travel or anything else they wish. For some, it is almost like receiving "free money."
Did you know that well OVER 85% of all policies lapse because policyholders are unaware a secondary market exists? They have usually paid, or their company has paid for these policies for years and they are not getting their best value for them.
Why Invest in Senior Life Settlements?
Investors are attracted to Life Settlements because they offer the opportunity for potentially high returns that are not tied to stock or bond markets, interest rates, world events or business cycles.
The Life Settlement industry has become a valuable financial planning tool. Life Settlements are recognized by The American Institute of Certified Public Accountants, the American Cancer Society, AARP, Wharton School of Business, the Wall Street Journal and USA Today to name just a few.
Over the past several years, the market for Life Settlements has grown substantially, both from the demand and supply side of the transaction, with an increase in the average face amount of policies presented for sale. Based on market research, the total face value of life settlement transactions completed during 2006 was approximately $5 billion in face amount. In 2005, Sanford C. Bernstein & Co., LLC, a research unit of Alliance Bernstein, L.P., estimated the market to be approximately $13 billion in face value of policies purchased from 1998 through 2005. Some estimates feel this will grow to over 165 billion over the next few years.
Because of the large number of policies available and the diversification that Life Settlements provide, we believe the interest from both individual and institutional purchasers will continue a steady growth.
Instead of selling the policy back to the issuing insurance company, at less than market value, or allowing the policy to lapse and forfeiting the value, life settlements allow another exit option that can quickly maximize the cash value for the policy owner. In many cases, the purchase price is well in excess of current cash surrender values. Most policies purchased today are in the range of $1 to $5 million dollars in policy death benefits.
Have not heard of Life Settlements?
A "New" Asset Class Life Settlements are a new asset class to individual investors, so new that many investors are not aware of them. However, large institutions, Hedge Funds and Pension Funds have been using them for years. Our individual investors who have purchased bonds, one would liken this investment to a zero coupon bond, but without a fixed maturity date and no “phantom” taxes.
Other Investors in Life Settlements Although Life Settlements may be new to many smaller investors, they are not new to institutions and larger investors. Companies such as Merrill Lynch, Citigroup, Credit Suisse First Boston, Wachovia, Wells Fargo, CAN and Berkshire Hathaway (Warren Buffet’s Investment Company) have all financed or invested in life settlements. Although these companies have not offered these types of investments to the average investor, they have made the investments on their own behalf due to the attractive potential rates of return that this asset class can produce.
Why hasn't your adviser recommended Life Settlements for your portfolio? We have listed a few reasons, and you may draw your own conclusions. 1.Commissions for Life Settlements may not compare to those of many mutual funds, bonds, annuities, and other investments offered by the investment firms. 2. Life Settlements have No Ongoing Management Fees of 1% to 2%!
3. Once again, you may simply Follow the Money, as many Life Settlements are not as profitable for the brokers and their sales personnel.
4. If I was not offered an investment class which had historical annual returns of 10% or more since 1991 and no market risk, I would be concerned about the expertise of my adviser, especially since my portfolio had lost between 30% and 50% in the last 18 months. I would imagine some advisers are aware their current clients might be upset about not being made aware of Life Settlements.
5. Some financial advisers may only represent investments available through his or her firm’s inventory. Representing any other investment would be considered “selling away” and cause for dismissal.
This, in our opinion, is not in the client's best interest.
The reasons above, could be why some of our investments, and Life Settlements in particular, continue to fly under the radar.
What type of ROI can I expect?
Life Settlements have averaged over10% returns each year. The returns are consistent and compare favorably with any investment available. How does this compare to your current investments?
Past performance does not guarantee future results, and your return may vary from the historic average.
Just because you haven't heard of Life Settlements, doesn't mean they aren't a "Great" investment. Few folks had heard of mutual funds until the 80's. Mutual funds were the rage in the late 80's and 90's, and performed very well. Since 2000, they have fallen out of favor, and for very good reason.
If you had invested $100,000 in mutual funds 10 years ago, you would have $75,000 today, and history also confirms these figures.
1. How do life settlements compare with other investments?
Life settlements are a unique type of investment, unlike any other type of traditional Wall Street investment. Therefore, as much as there is a temptation to try to do so, they cannot be evaluated and compared in the same way as other investments such as mutual funds.
No Management Effort
As everyone knows, mutual funds, hedge funds or individual companies are business entities which are managed. The better that management is, the more profitable it will be and the more valuable the shares will be. Therefore, one key factor that analysts rely on to prognosticate the performance of management is historical performance and consistency. This is why the returns for mutual funds are often measured in one, five and ten year terms. In addition, the financial performance of mutual funds or companies affects every shareholder equally. If the fund made a handsome return that year, everyone in the fund during that time realized the same pre-tax return. If the fund lost money, everyone felt the loss in the same way.
With direct fractional ownership (“DFO”) of life settlements there is no managerial or entrepreneurial effort needed to generate profits for the investor. Therefore, in a DFO transaction, you actually own a discrete interest in a life insurance policy and are not relying on management in order to generate profits. Instead, you are purchasing an asset with a stated future value at a discount to its face value. The only variable is time which can be estimated, but not controlled.
Life Settlements are approved for qualified funds such as 401K, Traditional IRA's, Roth IRA's and others. Please see the FAQ section for more information on retirement accounts.
Pension Funds have been using Life Settlements for years in their plans to get dependable returns for their investors.
Direct Fractional Ownership (DFO) of Policies
With Direct Fractional Ownership, the smaller investor can finally get involved in Senior Life Settlements.
In better years, Ed McMahon was healthy and lively as the sidekick to Johnny Carson.
But in later years Ed had many health issues including cancer. Not being able to work and no longer making a living, the McMahon's were facing foreclosure and other debt issues. This stress was not good for either of them. They decided to sell one of their large life insurance policies. The sale of this policy gave the McMahon's the peace of mind they needed to get through this tough time.
For more information on Life Settlements as an investment, contact us at info@investa.biz
Do your stock market returns look like the graph below?
If you said yes then you are not alone. Even if you have experienced an upswing since the meltdowns of 2000/2001 and 2008, your long term results probably are not that much better. On October 1, 1999 the market was at 11,497 on October 25, 2010 the stock market was at 11,118. This shows a loss over 10 years. Can you afford to keep all your money in the stock market? Maybe the time is now to look at other alternatives to add to your stock portfolio. You might want to look at these investments for 5%-30% of your total investment dollars to help offset the possible losses in the market, real estate, bonds and etc.
Are you tired of the volatile ride in the stock market? Would you like a much safer vehicle for your long term (2-7 year) investment funds that has produced strong double digit returns?
If your answer is YES, please contact us at info@investa.biz for more information and to set up an appointment to meet with one of our consultants.
Can Warren Buffett, Bill Gates and thousands of others be wrong?
We expect the Life Settlement business, an emerging secondary market for life insurance, will grow more than ten-fold to $160 billion over the next several years…” ”Bernstein Research Call”
Is your portfolio producing high single to double digit (or more) annual returns?
It is IMPORTANT that you do your due-diligence when looking at alternative investments. Life Settlements are no different. You need to KNOW and TRUST who you are doing business with. If you would like a complete due-diligence package, contact us at info@investa.biz
Too Good to Be True?
Because most investors are used to achieving single digit returns in their portfolios, many are skeptical about Life Settlements because of their potential for high returns with little risk. Of course, all investments have particular risk associated with them and life settlements are no exception. With Life Settlements, a lack of liquidity and the risk that the insured lives beyond the anticipated life expectancy are the two primary risks. They are a growth instrument, not an income producing investment.
Therefore, any purchase of Life Settlements should be made with funds that you do not need to access in the short run. If the insured does outlive his or her life expectancy, investors will be required to pay their portion of the annual premium. Some policies will “go long,” and some policies will mature early. However, in order to ameliorate that risk, policies are priced to yield double digit returns even if the insured outlives his or her life expectancy by several years.
Third Party Articles
Fortune Magazine Fastest Growing Companies 2010 Click Here
Federal Reserve and Stability of Life Settlement Industry Click Here
The Secondary Market for Life Insurance is Poised to go Mainstream- AreYou Ready?Click Here
Company Applauds NCOIL's Model Legislation Click Here
WSJ Article ”Is a Crash Coming?" 10 Reasons to Be Cautious Click Here
Bloomberg Article ”Dow Average Set to Tumble Several Thousand Click Here
Andrew Left (Citron Research) Sanctioned Severely Click Here
Fortune Small Business FSB 100 for 2009 Click Here
FAQ's
Why would a policy owner sell his or her life insurance policy?
A life settlement may provide a better alternative than allowing an unneeded policy to lapse or to be surrendered for its cash value. Life settlements are considered for a variety of reasons, such as: · A policy is no longer needed or wanted (e.g., spouse dies, divorce, children are grown up and financially responsible, etc.) ·Changes in estate, tax or financial plans or changes in law, etc., occurring subsequent to policy issuance can cause an individual to consider lapse or surrender of a policy ·Funds are needed to pay for long-term care or healthcare costs; ·Premium payments have become unaffordable as policy owners grow older ·Investment in the insurance is no longer appropriate.
Who purchases life insurance policies in life settlements?
Today, multi-national banks, international corporate conglomerates, global insurance companies, pension funds, hedge funds and other major financial institutions—the same institutions that invest in life insurance companies—are purchasing life insurance policies through life settlements. Two of the largest insurance holding companies in the United States, Berkshire Hathaway and American International Group, have been significant purchasers of life insurance policies. Overturning prior guidance, the Financial Accountability Standards Board issued a technical bulletin (FSP FTB 85-4-1) on March 27, 2006 to permit acquirers of life insurance policies to elect to account for their investments in life settlement contracts using either an investment method or fair value method. It is believed that FASB’s policy change will result in additional U.S. institutional investors participating in the secondary market for life insurance policies.
Now smaller investors can take advntage of these type of assets through fractional ownerships provided by some companies.
Overturning prior guidance, the Financial Accountability Standards Board issued a technical bulletin (FSP FTB 85-4-1) on March 27, 2006 to permit acquirers of life insurance policies to elect to account for their investments in life settlement contracts using either an investment method or fair value method. It is believed that FASB’s policy change will result in additional U.S. institutional investors participating in the secondary market for life insurance policies.
What types of policies can be purchased?
Most life insurance policy types qualify for a life settlement, including universal life, adjustable life, variable life, whole life, survivorship, joint first to die, portable group life, and even term life, if convertible (and assignable). Policies can be owned by individuals, corporations, partnerships, trusts and charities.
How much will the owner be paid for his or her policy?
The amount to be paid to the owner of the policy depends upon a number of factors, including the face amount of the policy, the amount of premiums that will have to be paid to keep the policy in force, and the cash surrender value of the policy.
Are there any restrictions as to how the selling policyholder can use the settlement amount?
The selling policyholder is free to use the settlement as he, she or it chooses. Some owners use proceeds to purchase long-term care insurance. Others gift the money to family members and charities or fund investments. Still others use the money to enhance the quality of their lives.
Is the buying and selling of existing life insurance policies regulated?
Yes, in many states. The National Association of Insurance Commissioners, representing insurance commissioners from all 50 states, adopted a model act, the Model Viatical Settlement Act (the “Model Act”), that has been partially adopted in as many as 29 states, and legislation to regulate life settlements is currently pending in numerous other states. The Model Act was first introduced in 1993 to regulate the sale of life insurance policies by a protected class of terminally ill individuals, and was expanded in 2001 to regulate all persons selling life insurance policies. Regulation of life settlements is generally administered through the respective insurance departments of each state. In a number of states where life settlements are not regulated, members of the life settlement industry are working with state legislators to enact such regulation.
Life settlement statutes in most states require life settlement providers to obtain a license from the state in order to enter into life settlement transaction. Providers are required to submit extensive information on the company and its principals, all of which is reviewed by the state’s department of insurance, to obtain a license. In addition, all forms of application, purchase agreement, and other ancillary documents that a provider intends to use for a life settlement transaction must be approved for use by state regulators. Generally, life settlement providers must renew their licenses annually or biannually and must file an annual report in each state in which they are licensed.
The business of insurance, itself, is not federally or nationally regulated. Instead, the McCarran-Ferguson Act (15 U.S.C. §§ 1011-15) of 1945 gave continued authority to the states to regulate the business of insurance. While the states’ authority over the business of insurance has been limited by federal statutes enacted since the McCarran-Ferguson Act, states retain primary control over it.
How does a life settlement work?
Life settlements typically begin with the filing of a settlement application by a policy owner and insured, together with necessary documentation. A life settlement provider will verify the insurance coverage and the insured’s medical status, and will determine the policy’s viability for a life settlement (including reviewing the case for potential fraud). The life settlement provider will also determine suitability for funding and will match the policy with an appropriate institutional funding source that could acquire the policy. The life settlement provider will then relay an offer to the advisor of the insured or, if different, the owner of the policy. If the offer is accepted, a closing package will be delivered to the advisor of the insured or, if different, the policy owner. Signed documents are then returned to the life settlement provider and, assuming everything is complete, the insurance carrier is notified. Following written verification of the change of ownership of the policy, settlement funds are transferred to the insured or policy owner (as applicable) from escrow.
Are life settlements good for the consumer?
Yes. More than $9.7 trillion of individual life insurance was in force on 167.7 million policies at the end of 2004, according to the 2005 Life Insurers Fact Book, compiled by the American Council of Life Insurers, and almost 9 of 10 universal life insurance policies are lapsed or surrendered (approximately 40 percent in the first five years from the date of issuance of the policy).
The average life settlement pays a policyowner three to five times more than the cash surrender value of the policy, and often many times more. Since 2001 over a billion dollars in excess of the cash surrender value has been paid to senior citizens who chose to sell, rather than lapse or surrender, their life insurance policy.
The money that seniors receive may be used to improve a home, fund a grandchild’s education, start a small business, pay medical expenses, repay debts or deal with an unexpected life change. For those consumers, the ability to sell some or all of their life insurance policy provides flexibility to meet pressing financial needs with money that ultimately belongs to the policyowner.
Are life settlements common?
Legal and financial advisers, as well as insurance agents and brokers, are becoming more knowledgeable about life settlements, as are senior citizens. It is estimated that by the end of 2005 over $10 billion in face amount of life insurance had been sold and purchased through life settlements. This number is growing steadily — according to analysts at Sanford C. Bernstein & Co., LLC, to more than $160 billion over the next several years—as more senior citizens and their advisers and agents, as well as institutional investors, learn about life settlements.
What are the tax implications of a life settlement to the selling policyholder?
It is generally understood that the amount of the settlement that equals one’s cost basis (usually the aggregate amount of premiums that have been paid) is not taxable. If one were to surrender one’s policy, the amount in excess of one’s cost basis up to the cash surrender value that one could get from the insurance company is taxed at ordinary income tax rates. The amount received in a life settlement in excess of the cash surrender value is taxed as capital gain.
What is non-recourse premium financing?
Consumers have become increasingly aware that the market value of their life insurance policies includes the right to exercise the assignment clause by selling on the open market. This secondary market value is commonly exercised when a policyowner pledges the policy as collateral for a loan, such as a business loan or a personal loan.
Consumers are now able to use the market value of their life insurance policies to obtain financing to pay premiums for new or in-force life insurance. So-called “non-recourse” premium financing helps prospective policyowners and policyowners obtain and maintain needed life insurance. Non-recourse premium financing uses only the market value of the policy itself as collateral to support the loan.
Major Press Releases
Article Quotes:
“…In May, as the sub-prime mortgage market was cracking, many of the biggest players in finance gathered at a conference in New York to talk about the next exotic investment coming down the pike: death bonds. When the event was held two years ago, just 250 people showed up. This time, nearly 600 descended on the Sheraton Hotel & Towers for the three-day confab, including delegations from Bear Stearns, Deutsche Bank, Lehman Brothers, Merrill Lynch, UBS, Wachovia, Wells Fargo, and other big firms. They flocked to seminars with titles such as "Legislative Review," milled about the exhibition hall picking up the usual conference swag, and buzzed at luncheons and a Carnegie Hall gala about the big push into the market being made by Cantor Fitzgerald, a major bond-trading shop. With all the happy banter, you wouldn't have known they were there to learn about new and imaginative ways to profit from people dying.” Business Week, July 30, 2007
“One of American International Group Inc’s recently disclosed numbers-crunching problems relates to on of its most obscure businesses: “Life settlements.” … “Policies with a total face value of around 10 billion were bought and sold last year, according to the Viatical and Life Settlement Association of America.” … “And a few years ago, Berkshire Hathaway Inc., the investment vehicle of billionaire investor Warren Buffet, began buying Life Settlements, according to securities filings,…” The Wall Street journal, May 18, 2005
“…The secondary market in life-insurance policies is good for consumers…” “Hitherto, elderly Americans with policies they do not need or cannot afford to keep up have had little option but to let the policies lapse or sell them back to their insurers. Plenty seem glad to have an alternative buyer. No wonder, when on average they can get three times as much from life settlement firms as they can from their original insurers.” “The Economist”, May 17, 2003
“- - we think this market is a win-win for consumers.” “Morningstar”, June 16, 2006
Paradigm shifts don’t occur overnight. Yet, somewhere along the line, there comes a convergence of factors that makes significant change inevitable. With regard to the secondary market for life insurance, this “tipping point” may already be in the rear-view mirror. In the past few years, the secondary market for life insurance has exploded onto the financial planning scene. Clearly, the market’s basic premise – the consumer’s right to sell unwanted or unneeded life insurance – has been validated by the U.S. market’s spectacular growth, which is expected to exceed $45 billion in face value by 2007….” “California Broker”, Feb., 2004
The rise of the secondary market for the sale of life insurance policies is raising a number of similar questions that need to be addressed by life insurance carriers, their broker-dealers, and their licensed producers. Will the failure of some prominent insurance carriers to inform policyholders about the life settlement market spawn a new area of consumer-based litigation?” “California Broker”, March 2003
We expect the Life Settlement business, an emerging secondary market for life insurance, will grow more than ten-fold to $160 billion over the next several years…” ”Bernstein Research Call”
This webpage is informational only, and is not to be construed as a solicitation, sale, offer to sell, or solicitation of an offer to buy life settlements. Life settlements are only available to certain suitable, accredited investors and may not be available in your state.
Senior Life Settlements Defined 
Life Settlements are approved for qualified funds such as 401K, Traditional IRA's, Roth IRA's and others. Please see the FAQ section for more information on retirement accounts.
Pension Funds have been using Life Settlements for years in their plans to get dependable returns for their investors.
With Direct Fractional Ownership, the smaller investor can finally get involved in Senior Life Settlements.
But in later years Ed had many health issues including cancer. Not being able to work and no longer making a living, the McMahon's were facing foreclosure and other debt issues. This stress was not good for either of them. They decided to sell one of their large life insurance policies. The sale of this policy gave the McMahon's the peace of mind they needed to get through this tough time. 
If you said yes then you are not alone. Even if you have experienced an upswing since the meltdowns of 2000/2001 and 2008, your long term results probably are not that much better. On October 1, 1999 the market was at 11,497 on October 25, 2010 the stock market was at 11,118. This shows a loss over 10 years. Can you afford to keep all your money in the stock market? Maybe the time is now to look at other alternatives to add to your stock portfolio. You might want to look at these investments for 5%-30% of your total investment dollars to help offset the possible losses in the market, real estate, bonds and etc.
If your answer is YES, please contact us at 
It is IMPORTANT that you do your due-diligence when looking at alternative investments. Life Settlements are no different. You need to KNOW and TRUST who you are doing business with. If you would like a complete due-diligence package, contact us at 