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Investors |
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OVERVIEW
INVESTOR NEWS/EVENTS
BACKGROUND
ADVANTAGES & RISKS
AVAILABILITY
DISCLAIMER
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ADVANTAGES AND RISKS
The significant advantages to investing in life settlements include:
- Above-LIBOR returns due to the inefficiency in surrender values;
- Low volatility due to restriction on the health and medical conditions of the insured. Although the time of death of the insured is uncertain, rigorous medical evaluations, together with robust actuarial tables for seniors, allow for determination of the probable upper bounds on actual life expectancy with high confidence levels.
The significant risks include the following:
- Actual life expectancy, i.e., the mortality/longevity of the insured;
- The accuracy of the medical evaluation that determines the life expectancy;
- Claims paying ability of certain carriers. However, Life Settlement Solutions requires that the carriers have high ratings from recognized rating agencies;
- Low liquidity, since this asset class is not commonly traded in tertiary markets; and
- Long-term investment, tied to the expected weighted average life expectancy within a typical portfolio.
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