THE LIFE SETTLEMENT ASSET CLASS: GROWTH OF AN ESTABLISHED MARKET

 

The Life Settlement market evolved from the viatical settlement industry that developed in the 1980’s which provided liquidity for terminally ill policyholders.  The difference is that life settlements are policies  on insureds who are not terminally ill, 65 years old and over, generally wealthy and typically have life expectancies (LE) between two to fifteen years.

 

The Life Settlement market grew dramatically reaching $12 Billion in transactions by 2007 primarily with institutional investors looking to diversify into investments with high returns while keeping risks low.  The life settlements market provided such an alternative.  Today, individual investors like you can participate in this new asset class just like the smart money and enjoy the returns from this rapidly growing industry that is expected to reach $150 billion within a decade.

 

The chart below shows a performance comparison against other equity indices and bonds, like the S&P 500, Credit Suisse’s Hedge Fund and U.S. Bonds. In the recent economic downturn starting in 2008, investors suffered heavy losses in value with most asset classes they own: equities, real estate, currency, and commodities. Life settlements, however, remained stable and steady since it virtually has little or no correlation to other assets and markets.  By adding life settlements to an investor’s portfolio, volatility is greatly reduced.  This hedging strategy is why institutional investors have been amassing billions in this asset class.  Our program’s structure allows individual investors to accomplish the same.

 

 

History and Forecast of US Life Settlement Market

 

The following chart illustrates the tremendous growth of life settlements transactions.  Billions of dollars of life settlements have been acquired by investors over the last decade primarily by institutional investors and are expected to continue even more over the next few years.  According to Sam Rosenfeld of The Wharton Financial Institution Centre, “the life settlement market has the growth, stability, regulatory oversight and acceptance both domestically and internationally to thrive.”  Today, our program allows qualified smaller investors to participate in the returns from this unique asset class which the institutional investors have primarily enjoyed over the past two decades.