(As published in Northbay Christian News, written by Jesse Millares of The Vespri Group, October 5, 2010) Today’s economy is downright scary with the financial news reporting continued falling house prices, job loss, plummeting retail sales, credit crunch…the list goes on.
Greed and indiscretion has brought us to this point. Government bailout money and cheaper debt is not enough to steer this economy back on course. The problem goes deeper with consumer debt, household spending, corporate profits - all needing a correction back to acceptable levels. That's bad news for investors and the global economy.
How then do we navigate through today’s market with its higher volatility and risk without more losses to your investments and more importantly, have peace of mind? The first thing is to rely on the Word of God as our ultimate authority in guiding us. The Bible provides advice not only about our spiritual life but also our natural life – even about investing.
All investments have its inherent risk. Some have more than others. It is natural today to be more fearful than ever to invest our money in anything in which our principal is not guaranteed. However, the Bible also speaks to us in Luke 19:12-26 about investing our money rather than just stuffing it in our mattress. This is a key Biblical reason for investing. The parable of the talents teaches us that God expects us to be good stewards of our wealth by managing it through investing and multiplying it. Also, 1 Timothy 5:8 says “If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever.” Investing our money allows us to better assure our ability to provide for our families now and in the future. Lastly, by multiplying the wealth afforded to us, we as Christians are better able to provide for the needs of our church through tithing.
So what can we invest in during these uncertain times while being a good steward of our money as in Luke 19? This is the dilemma of today’s Christian investor. Is there such an investment alternative today that can provide better safety for our money while allowing us to multiply our principal in the manner required?
There is. It’s called Life Settlements. While other investments have fallen apart over the past couple of years, this new asset class has grown stronger and better structured. What is it? Quite simply, Life Settlements is the purchase of life insurance policies from seniors who no longer want or need their policies. Many of these policies often were originally purchased for business reasons such as Key Man Insurance and funding Buy/Sell Agreements.
With Life Settlements, the senior no longer has to pay future premium payments while receiving a lump sum cash payment that is always much more than the cash surrender value of their policy. Life Settlements today benefits Seniors in many ways. It can provide the necessary funds for their dependent care and medical needs, take a dream vacation, support their church or favorite charity and even buy a new and better life insurance policy.
Previously, only the super wealthy or institutions such as pensions, hedge funds and investment banks could invest in them. Even Warren Buffett has invested heavily in this asset class over the years and continues to do so every year. Today, the smaller investor can now participate and enjoy its advantages of high safety and above average returns. This is accomplished by investing in a pool of life policies that have already been sold by Seniors. Also, Life Settlements are uncorrelated to the stock market’s fluctuation and buying into a pool provides diversification.
All investments have its pros and cons and Life Settlements is no exception. It is important that we consider it in its proper place within our investment portfolio. With its unique advantages, it deserves our consideration as a new alternative for today’s unsettling times while allowing us to be proper stewards of our wealth.