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“It enables people to diversify their portfolio,” Calhoun said in a phone interview, cautioning, “It’s not suitable for startup investors.”
Potential clients must have a net worth of at least
Institutional investors have included pension funds,
Life settlements were invented in the 1980s, when policyholders with AIDS had depleted their assets and sought to sell their life insurance policies to pay for treatment. Investors bought the policies, then collected upon the death of the insured. A decade later, the market dried up because of new drugs prolonging the lives of AIDS patients.
Life settlement companies then turned to a different market, people 65 and older who would rather have cash now than leave it to their heirs later.
“We only buy policies from those 75 and over,” Calhoun said. “If the insured lives a long time, it creates a problem for investors.”
While it’s impossible to predict exactly when someone will die, he noted life expectancy is 74.9 years for men and 80.1 years for women.
The market for life settlements grew to be a
More than 3,700 life insurance policies were purchased in 2007, compared to 4,500 in 2008 and 2,600 in 2009, according to the GAO survey.
What can you get for a policy? It depends on your age, your health and your premiums.
“We make money through a gross margin,” Calhoun said.
After seven years in
A complaint prompted the state to issue a cease-and-desist order to
“The reason’ for the withdrawal is confidential, but orders such as this one are subject to a due process’ whereby the accused may challenge the order and present information to contradict or justify actions or practices,”
“If you are going to sell current investments to buy these, what are the costs of redemption?” she pointed out.
One of the hardest things to know when you are selling a life insurance policy is whether you are getting a fair price, according to the
The 2010 GAO report recommended
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