As with most investments, there are risks associated with life settlements. Life settlement investment returns can vary greatly. The investor must determine their appetite for risk versus reward.
There are a few factors that will have considerable influence on your investment and will be determined by your investment strategy. Factors such as credit rating of the life carrier issuing the policy, prevailing interest rates, changes in premium costs, product availability and liquidity of capital may have an impact on your investment. Most significant is Life expectancy.
Life expectancy will ultimately determine the length of time you must keep your investment in force. During this time the investor is responsible for the policy’s maintenance costs which, most notable are premiums. Upon maturity of a policy, the premiums and other maintenance costs stop, and the investor receives the death benefit. This length of time is most significant in determining the investment return.
While qualified licensed medical professionals and actuaries perform life expectancy evaluations, there are no guarantees that the insured will live longer or shorter than the life expectancy provided by the evaluator.
However, there are many strategies that can be employed to minimize any or all of these risks, including life expectancy, and depending on your overall investment objectives.
SGI has over 20 years’ experience in the business and employs qualified staff ready and available to discuss your overall investment strategy, determine your tolerance for risk, and develop a life settlement model that will obtain your investment objectives.