Greetings!


 

Welcome to my all new web site still in the developmental stage. I have had my own web site for about ten years or so, and I must say, over those years I have learned so much as the level of technology has been moving at warp speed, hasn’t it? But, this is a new transition for me personally as well as professionally. First, I became familiar with Microsoft, Front Page for accessing and managing my web site. I received a Beta copy of Office 98 way back when. Later, I upgraded to Office 2000 and used that for many years as well. Then, last year, I upgraded to Office 2010, each time having to adjust and become familiar with the all new format. Since Microsoft does not provide Front Page any longer, I used the old version that I had for many years until recently, when I switch to WordPress. I am discovering and learning this new program and how it works. And, I have never “blogged” before so this is a new experience for me as well.

Sometimes, I think of blogging with a negative connotation. Why? I don’t know, I just do and perhaps a result of my mindset that has been influenced by a lot of negative content and without a lot of substance that has been posted over the years. One site in particular, is owned by an acquantance of mine who always seems to have an axe to grind about one thing or another, and, usually in a negative tone of voice. I think he must wake up in the morning angry, and go to bed at night angry as well. I suppose it’s post like that which help to form my mindset.

I don’t really want to get involved in writing a lot of negative content. Instead, I’d like to provide the reader with a lot of value and wisdom as well. Both items in short supply these days, don’t you think?

 

July 25th, 2013

Life Settlements, An Alternative Asset Class

 

After years of having worked in the financial service sector working with major brokerages, truth be told, I was never introduced to an alternative asset class know as Life Settlements. It’s an asset class that has been around for many years, but primarily incorporated into major banks, insurance companies and industrial type portfolios. Warren Buffet, and his company, Berkshire Hathaway, have been particpating in this asset class for many years to haul in double digit returns year in and year out without any ties to the stock market. So, how does all of this work and why haven’t you heard about it you might ask?

  First, Life Settlements are normally large insurance contracts, ( usually, with a death benefit of $1,000,000 or more, typically $5,000,000. or $10,000,000), which have been offered for sale for a number of reasons. For example, perhaps, a company carried a large key man insurance policy on one of it’s valued executives and now years later no longer needs or wants to continue to fund the policy. So, what are the options? First, they could just stop paying premiums on the policy and it will expire when the policy is no longer supported. Secondly, they could withdraw the cash value, which is normally only a small percentage of the amount of premium dollars contributed, or, the third alternative is to offer the policy for sale. This option normally yields four to five times more than the cash value which makes it good for the seller and the trust company that buys it.  Trust companies typically are interested in purchasing these as part of their portfolio as, (1) They are normally highly rated policies which make the payout very predictable, and (2) The return on the amount contributed are usually quite good offering a fairly high return for the dollars contibuted to buy the policy,  using a narrow selection criteria.  Historically, this asset class has had a rate of return of around 14 percent since 2001.

  You might ask, why didn’t my broker, financial advisor or money manager ever tell me about this? The reason being, is because major brokerage firms are not interested in this asset class for a number of reason too numerous to list here, and, primarily because it only known by about 15% of the financial services sector. Since it’s an alternative asset class, it’s but a small segment of the financial service dollars here in the U.S. market. However, biggest reason is because historically it’s only been available to institutional type investors until recently when some trust companies have packaged these products to make them available to individual investors both for qualified accounts, (IRA’s, 401k’s) and non qualified accounts.  Primarily positioned for accredited investors or high networth individuals, may make it beyond the reach of the average investor

   To learn more about this alternative asset class simply fill out the form to the right for your free report.