In working with investors we are regularly asked to review portfolios. Buying life settlements requires extensive due diligence but often when you are first presented with a portfolio you can spot some red flags. Now these red flags don’t mean that you have a bad portfolio or that you should go running for the hills. Quite the contrary in my opinion if you are expert enough in your ability to do the due diligence required this might be exactly where you will find the best deals. But this is definitely an area of life settlement investing to keep your wits about you.

We were asked to help a client recently and as normal the first look at this $500M portfolio was a spreadsheet.

Red Flag 1: Who owns the portfolio? And more importantly are you talking to them directly? The fact is that spreadsheets are passed around this industry like dinner rolls. Long broker chains will kill any chance of a deal.

Red Flag 2: All policies are 2-3 years old. That means this is likely a BI portfolio or financed, so buyer beware of STOLI.

Red Flag 3: These recently issued at Preferred rates and new LE’s are now all short. Sure declines in health happen but if you are looking at a few dozen policies with that fact pattern in the same portfolio statistics would say something is awry.

Red Flag 4: Lots of insurance on single lives. It goes without saying that concentrating in relatively few lives is a risky proposition. But also when one portfolio has been assembled this way it should call into question the sellers motives and caliber of origination.

Red Flag 5: The Brooklyn specials. The simple fact is that there has been a good deal of questionable inventory originated in the NE area and a concentration from there is cause to increase scrutiny.

There are plenty of life settlement portfolios that have one or all of these flags. If you have the ability to do the due diligence necessary it could be a great opportunity to pick up some very discounted life settlement inventory.

Red Flag 4:

When you retired you learned about all of the benefits that accompany being a senior.  As a member of the Golden Years community, you have access to discounts that others wish for.  One benefit that makes the rest of the population envious is an alternative investment, Life Settlements.  With Life Settlements, you are able to get  cash from an insurance policy that you already have.  The money you paid into your policy was meant to benefit your family, but if you have a need for cash now or simply no longer wish to pay the expensive premiums this could be a very profitable solution.  Life Settlements do not require you to divulge the reason you need the money. A life insurance policy is your property and like real estate, stocks or any other asset you own you have the absolute right to sell it, no questions asked.

Senior problems fixed by a better alternative

When you are accepted into the Golden Years community, many doors are opened to you.  You have earned certain privileges, you may  also have access to cash that others do not if you own life insurance.  As a senior, you may have the option to sell your life insurance like you might stocks or bonds that you own, for a large cash lump sum. 

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