What is a Life Settlement Fund?
A Life Settlement is the sale of a US life insurance policy to a third party, where the insured has an impaired life expectancy. In exchange for a payment in excess of the policy’s cash surrender value (even if none exists) the purchaser becomes the new owner of the policy. The new policy owner pays all future premiums during the remaining life of the insured and ultimately collects the full ‘face value’ of the policy on maturity. Why are only US life policies used? US life policies offer the most secure investment opportunities as laws in the US are very strict when it comes to insurance companies and any policy running for at least two years from inception cannot be contested from that point, even if the application was fraudulently completed. Why do life settlement funds perform so consistently? They invest in life insurance policies which are unaffected by market volatility. We buy a policy at an agreed price and know exactly what we will get back, the only question is when (?). Ho
Life insurance is one of the largest businesses in the world, and the life settlement fund is one of the latest incarnations or spinoffs of the evolving insurance industry. A life settlement fund may refer to any of a number of institutional investors who purchase life insurance policies from those who would otherwise cash them out and surrender the benefits. Universal, or “whole,” life insurance policies are the ones which are sold to a life settlement fund, rather than term life insurance. The concept of the life settlement fund originated in the United States, where universal life insurance policies are relatively common. Most of these policies, up to 90% by some estimates, never result in a claim upon the death of the insured. A lot of this is due to the fact that the insured usually has the option of taking a large cash payment while still living, rather than waiting until death for a claim to be filed by his family, but these cash payments are generally nowhere near the value of
