INVEST IN LIFESHARES
WHAT IS A LIFESHARE?
Life Shares are a partial ownership interest in a privileged investment vehicle called a life settlement. The life settlement asset class came into existence over 100 years ago but has only been available to institutional and ultra-high-net-worth investors. As a result of recent legislation, however, it is now accessible to California residents who qualify. Empirical data continues to show how life settlements have averaged superior returns while keeping one’s principal safe.
“Smart money” investors including Wells Fargo, Merrill Lynch, and Warren Buffett’s Berkshire Hathaway have quietly placed billions of dollars into life settlements because they offer superior return potential with minimal volatility and no downside risk. Through Life Shares, individuals can now share in the profitability and peace of mind that top investment firms have enjoyed for decades.
As investors continue to search for both safety and yield, many are discovering life settlements. Life Shares allow qualified investors to own fractional shares of life settlement assets, similar to buying shares of stock in a publicly-traded company.
WHAT IS A LIFE SETTLEMENT?
A life settlement is the purchase of an existing life insurance policy, by a third-party investor, for more than the cash surrender value of the policy. Originally designed for institutional and corporate investors, the life settlement market is now available to qualified individuals.
Life settlements have no correlation to stock or financial markets, oil prices, interest rates, or traditional investment classes. Investing in life settlements can offer outstanding returns while minimizing risk.
Life settlements evolved in the United States during the late 1990s, and experts estimate the market to grow to between $100 and $160 billion over the next two decades. A significant number of policies are expected to come to market, supported by various trends including Baby Boomer population growth, financial uncertainty, and favorable legislation.
Until recently, the only option a policy owner had was to surrender their policy back to the insurance company. With the advent of life settlements, an insured can now sell their policy on the secondary market for an amount much greater than its cash surrender value.
A HISTORY OF SOLID RETURNS
The AAP Life Settlement Index tracks the performance of funds implementing an investment strategy in U.S. life insurance policies (“life settlements”) and serves as a transparent benchmark for the overall life settlement market. The Index allows investors to run performance comparisons and analysis of life settlements to other asset classes, such as stocks, bonds, and hedge funds.
As can be seen by the above chart, as of February 2009, “the S&P [fell] 53% from its October 2007 peak and has now seen its worst six-month drop in percentage terms — 42.7% — since 1932, when it dropped 45.44% in the six months ending in June.”– The Wall Street Journal, Brutal February for Blue Chips, March 1, 2009.
Like investors who lost fortunes during the Great Depression, investors who had all of their money in the S&P 500 would have lost nearly one-half of their principal in February 2009.
During the most recent economic crisis, life settlements performed well against other indices, including the S&P 500 equity index, Credit Suisse Hedge Fund, and U.S. Bonds. With no correlation to other markets, life settlements can act as a defensive strategy to reduce the overall volatility of an investor’s portfolio.
Perhaps this is why institutional investors have invested billions into life settlements.
According to an 11-year study by The London School of Business, investors purchasing their sample of life settlements could have expected to earn an average cost-weighted internal rate of return of 12.5% per year.
Browse through our Lifeshare Policies