THE LIFE SETTLEMENTS MARKET: AN ALTERNATIVE ASSET FOR SMALL AND MEDIUM INVESTORS NOW TRANSFORMED WITH LiST
WHAT IS THE LIFE SETTLEMENTS MARKET?
Every year, about 100,000 insurance policies, with a combined face value of more than 100 billion dollars, are cancelled. Sometimes, policyholders simply stop paying premiums and allow the policies to lapse, losing their entire investment. In other cases, the policyholders sell the policies back to the insurance company for a small fraction of the premiums they’ve paid. But a little over one hundred years ago, it became legal for policyholders to sell their policies to third parties and the Life Settlements Market was established. This market made it possible for policyholders to reap more profit from an asset into which they had sunk considerable funds. It also created an enormous opportunity for investors to participate in the benefits from these assets.
However, navigating through the Life Settlements Market required professional-level understanding of specialized areas such as health analyses and actuarial tables. This asset also needed ongoing review and maintenance, requiring time and effort. These factors made it inaccessible to most small and medium-size investors who didn’t have time and resources to investigate and understand this lucrative but complex market so that they could participate in it efficiently and successfully.
WHY ARE LIFE SETTLEMENTS A GOOD CHOICE FOR INVESTORS?
Life Settlements are an excellent alternative for investors who wish to diversify into assets that are not controlled by the stock market. That’s why renowned investors such as Warren Buffet and Bill Gates have invested billions of dollars in this market.
- As long as the investor has sufficient knowledge about the market, Life Settlements have several advantages, including a relatively low chance of default. Payments come from Insurance companies, which are known for stability and have high credit ratings, reducing one area of risk.
- The Life Settlement Market is not affected by market fluctuations. The yield is mainly determined by a single variable—the longevity of the policyholder. Although there is absolutely no guarantee when the policy will mature, investors can make educated predictions based on actuarial tables and health analyses. Investors who participate in the Life Settlements Market avoid erratic forces that regulate the stock market, such as politics, weather, consumer interest, and inexplicable capriciousness. This is particularly true in today’s overheated stock market, which can implode at any time; an investment in Life Settlements is a hedge against a steep drop in stock, bond, and commodity markets.
- The Life Settlements Market offers attractive rates of return, often in the double digits. A study at the Wharton Business School showed that annual interest rates of 10% are common, which is rare for a relatively low-risk investment.
IF LIFE SETTLEMENTS ARE SUCH GOOD INVESTMENTS, WHY AREN’T THEY MORE POPULAR?
Despite the low-risk, high-yield nature of Life Settlements, there are several reasons why investors avoid them:
- Until recently, the Life Settlements Market was run by a closed club, mostly major investors who were not generous about sharing information and expertise that would allow more people to participate. Although some outsiders did invest, in many cases they did so without the necessary knowledge, which made them less likely to invest wisely. In many cases, their investments were not profitable.
- In the past, purchases of life insurance policies were tangled in complex regulations and red tape. Recent tax code changes make it easier for policyholders to sell their policies through the Life Settlement market. This may provide additional insurance policies for investors to review and purchase.
- Historically, the Life Settlements Market has been ridden with illegal policies and shrouded by secrecy. Policyholders had a hard time pinning down a likely payout and investors could not find out much about the policies that were offered.
HOW HAS LiST CHANGED THIS BROKEN MARKET?
All over the world, technology is removing barriers and creating transparency and opportunity in investment markets. LiST has extended this revolution to the Life Settlements Market. LiST’s cutting-edge technology is reshaping an outdated market, providing a secure, quality investing experience for small and medium-size investors.
- LiST’s highly specific technology and simulation tools provide transparency by laying out what each party can expect in each transaction. Algorithms have been created that clearly present payment and dispersion rates over the life of the policy. Each investor receives a digital platform and a complete overview of what is going on in their portfolios.
- Through LiST, an investor can fund many policies with minimal capital. In this way, investors diversify their portfolios and reduce risk by spreading their capital over multiple assets—in exactly the same way that major players do.
- LiST’s transparent platform makes this asset suitable for small and medium-size investors who do not have an efficient way to carry out due diligence on multiple policies. Investors can make their decisions with knowledge and confidence because LiST does most of the background work. This saves valuable time for the investors, allowing investors to evaluate enough opportunities to keep their portfolios diversified.
LiST is part of a new wave of e-Funding platforms that provide true value to both sides of every transaction. With LiST’s simplified, easy-to-use platform, both policyholder and investor achieve maximum profit and are fully informed and empowered to make the most beneficial decisions for themselves all along the way. It’s a win-win situation.
Contact us to find out more—we’re waiting to hear from you.