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Life Settlements have recently become an increasingly popular alternative asset class, especially in light of the recent mortgage mess, financial turmoil on Wall Street, and government bailouts. The Life Settlement market has rapidly grown into a $20 billion industry and is predicted by Bernstein Research to develop into a $160 billion market in a few short years.
Mostly supported by institutional investors comprising various brokerage houses, hedge funds, pension plan portfolios, and even Warren Buffett to the tune of $400+ million (as reported by Senior Market Advisor), the investment can also apply to individual investors at lower entry-level investment amounts. Life Settlement Investments involves buying into the beneficiary interest of a policy or policies and experiencing the return on investment just as a beneficiary in any life insurance policy receives the payout in a policy. This excellent diversification vehicle also serves as a great defensive strategy since the return is not dependent on or affected by a soft economy, stock market volatilities, interest rate fluctuations, the softening of the real estate market and the mortgage meltdown, soaring oil prices, unexpected global events, or other traditional economic factors.
This unique investment tool is offered to investors, both large and small, by Pacific West Capital Group, Inc., who offers the investment at a $20,000 minimum investment. Pacific West Capital Group’s structure enables an investor to purchase a fractional-interest or percentage-share of the death benefit in a policy or policies. Investors may utilize non-qualified/cash funds or may utilize qualified retirement account funds, such as Pension or Profit-Sharing Plans, or most commonly, money held in a self-directed IRA, to fund the investment. Although every offering company for the investment has its own policy purchasing parameters, Pacific West Capital Group only purchases policies with insureds 75 years of age and older, typically experiencing chronic or degenerative health conditions. In addition, only “non-contestable”, “permanent” forms of life insurance policies that have been issued by “A” rated or better life insurance companies, as rated by Standard & Poor’s, are considered.
Pacific West Capital Group’s investment structure offers prudence while producing a minimum 100% total fixed return, meaning the investor will double their money. Some policies even pay as much as 150% total fixed return, more than twice the investment! This fixed-return investment is a lump-sum payout at an unknown time in the future, rather than an interest or income-producing investment, so it is best for diversification, not an individual investor’s entire portfolio.
Although the time-frame for a single policy can never be predetermined, over approximately the last fifteen years, it is widely accepted that this market provides returns in the 12-14% range. This is certainly better than any of the equity markets and major market indices over this time-frame, or for the foreseeable future for that matter. Because of Pacific West Capital Group’s strict criteria for policies with respect to age and health, returns should be even higher. Especially when considering this investment on a risk-adjusted basis (everyone will eventually pass away and dealing with stable life insurance companies), the returns are too hard to ignore and should at least be considered for a portion of any size portfolio.
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