What Is a Life Settlement?
A life settlement is an investment strategy where institutional investors acquire life insurance policies at a discount, pay the premiums, and receive the payout from the insurance company when the policy matures. Because performance isn’t tied to financial markets, investors enjoy stable returns, protection from economic instability, and true portfolio diversification.
Why Should Advisors Care About Life Settlements?
Life settlements offer advisors a way to add stability, diversification, and peace of mind to client portfolios—without relying on the stock, real estate, or bond markets. Returns are based on mortality, not market movements.
Key Benefits:
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Non-Correlated: Unaffected by market ups and downs
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Strong Returns: Historical Record of 8–12% Returns
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True Diversification: Performs Independently
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Investing Through the Market Cycle
Life settlements behave independently of equity markets, real estate, commodities, and fixed income. This makes them a powerful diversifier—particularly valuable during periods of:
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Equity volatility
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Rising interest rates
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Inflationary pressure​
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Economic downturns
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In 2008 and 2020, while traditional portfolios suffered significant drawdowns, life settlements continued to perform on schedule, delivering stable and predictable returns regardless of the market chaos.
A Secure and Regulated Asset Class
Life settlements are legal under supreme court law and are subject to stringent regulatory oversight in the United States. These regulations ensure:​
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Full transparency for policy sellers
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Licensed intermediaries and providers
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Anti-fraud protections and legal recourse
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How the Investment Structures are Built
Life Settlement investments are typically structured through dedicated private funds, note issuances, or SPVs (special purpose vehicles), allowing for control, transparency, and regulatory compliance.
Structure Highlights:
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Open-end with defined investment periods
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No mark-to-market volatility
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Cash flow matched to maturities
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Audited reporting and third-party custodians
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These structures are purpose-built to offer both institutional and high-net-worth investors a stable, non-correlated, return profile.
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A Track Record of Proven, Stable Returns
Historically, well-managed life settlement portfolios have delivered strong, consistent returns—with far less volatility than stocks or high-yield bonds. Industry Track Record:
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Returns of 8–12%
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Extremely low standard deviation
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No link to financial markets or economic cycles​
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Life settlements have shown they can generate steady performance, even when traditional markets collapse.
Who Is This Asset Class Best For?
Life settlements are well-suited for investors looking for:
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Steady, long-term returns
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Diversification from market risk
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Predictable growth
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Protection during market fluctuations
Ideal Clients Include:
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Financial advisors and wealth managers seeking stable, non-correlated returns and peace of mind for their clients.
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