Most life settlements companies have structured their investment in such a way as to leave their clients exposed to unnecessary risks and additional out of pocket costs.
The Old Way:
Many of these companies would place your funds into one or multiple policies and put a portion of those funds into a “premium reserve account”. The premium reserve account would pay the premiums (cost of insurance) through the insured’s life expectancy. If the insured lived beyond life expectancy the premium reserve account would become depleted, meaning investors now had to immediately pay out of pocket for the premiums. If a case matured early, the life settlement company would pocket those funds as added profit.
The EquityLife Way:
We have reduced the chance that you will pay out of pocket for a premium call. Investors purchase life settlements from EquityLife as a pool of policies; the investor owns a portion of each policy. A premium reserve account serves the entire pool. If a policy goes longer than expected, premium reserve funds protecting the remaining policies are used as a back-up plan to pay that policy's additional premiums, so the investor doesn’t come out of pocket for the premium call. When any policy matures "early", that policy's premium reserve funds remain in the account to help pay for future premiums for the remaining policies in the pool. When the final policy in the pool matures, if there are funds left over in the premium reserve account, those funds are returned to the investor. Unlike other life settlement companies, we don’t pocket those funds - they belong to you!
*Life expectancy estimates are not 100% accurate and there’s no guarantee the insured will pass away on an exact date. Investors must realize there is a possibility some or all of their policies could go past life expectancy, thus lowering their overall return.