Since the late 1990s, investment banks and hedge funds have profited greatly within the secondary market for life insurance. The following tips, presented by Pacific West Capital and other members of the financial industry, will assist qualified investors interested in the fixed returns and diversification that life settlement investments provide.
Work With an Ethical Professional
Alan Breus for the Journal of Accountancy: Reputable life settlement firms should offer escrow services, use HIPAA-compliant forms to protect the insured’s privacy and notify the next of kin to avoid legal battles.
Invest, Don’t Gamble
Andrew Calhoun, CEO & President of Pacific West Capital Group: “If you want to ‘pick the winning horse’ and bet on who is going to die first, that’s foolish. But complete diversification from the conventional market and no dependence on the economy, that’s something that makes sense for almost everyone.”
Sell at the Right Time
Wendy Goldband for AARP: “There are definitely instances where a life settlement makes sense. Your life circumstances may have changed so that you no longer need the coverage. Perhaps you’ve just divorced. Or you may have been hit so hard by the economy that you can’t afford to keep paying premiums.”
Do Your Homework
Jennie Phipps for Bankrate: “Despite the successful track record of life settlements, investors need to understand what they are investing in. They should conduct research, review the contract with a financial advisor and pay attention to the news.”
Understand Your Options
Pacific West Capital Group: Virtually any entity with a tax identification number, including trusts and corporations, can become the beneficiary to life settlement proceeds.