What is a Life Settlement?
Thousands of senior citizens are looking to sell their life insurance policies for cash. Many use the cash they receive to help pay for end of life and long-term care costs. When they sell their life insurance policy to an investor or third party for cash this transaction is called a life settlement.
Example: Jane is 85 years old. She owns a $1,000,000 life insurance policy. She has developed chronic health problems, and now needs nursing care. Jane decides to sell her life insurance policy, instead of continuing to pay for it. She will then use the cash to pay for her long term care costs.
Why invest into life settlements?
For decades, only ultra-wealthy and institutional investors (Warren Buffett, big banks, investment companies, etc.) could afford to buy life settlements. However, today accredited investors can now purchase this product. Rather than one weatlhy investor purchasing an entire policy, now accredited investors can own a small portion of that policy.
What makes life settlements so attractive to accredited investors is the diversification provided and non-correlation to the stock market.