What is the minimum amount of capital a life settlement investor should consider dedicating to a life settlement investment program?
The amount of senior life settlement financing provided by the investor depends upon the structure of the program and the investor’s strategy (i.e., a buy-and-hold investor may be willing to invest differently and with different amounts than an institution with plans to securitize a portfolio of life settlements). The total invested capital can vary. In general terms, given the average life expectancy of the typical insured entering the market and the average face amount of policies being offered in the market, a $100 million commitment is now considered minimal or “entry level” when making a life settlement investment. Placement of smaller amounts is possible but the risk-reward characteristics of smaller portfolios must be carefully considered by viatical purchasers.
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