Life settlements are a very interesting side of investment. While they are most certainly an investment, they operate in a way that allows them to remain completely non correlated to the stock market. This makes life settlements very different from most investments.
When you invest in stocks, the market value can change drastically and sometimes rapidly. When there is a downturn in the market, it tends to become a downward trend because people start selling off that stock. This lowers the value of the stock even more, causing the stock to fall even further. This can be a major problem with the stock market. The upside, however, is that stocks can rise as quickly and as drastically as they can fall. This can be a huge payoff.
Life settlements, however, operate on a very different system. While the stock market is dependent on everyone who invests in it as well as the companies that are selling stocks, life settlements are dependent on the owner of the policy and the investor who buys the policy. This simplifies the investment a great deal.
An investment in a life insurance policy works on a somewhat differently than the stock market. The amount of money transferred in life settlement is generally dependent on the payout and the cash value of the life insurance policy. This makes the life settlement work in favor of both the policy holder and the investor. If the policy holder decided to sell back to the insurance carrier, he or she would probably be paid somewhere around one twentieth of the payout value. However, through a life settlement, that same policy holder can often receive around half of the payout value.
Life settlements allow the policy holder to get a great deal more out of selling the policy. However, it must also be beneficial to the investor. When an investor buys out a life insurance policy, he or she takes over all payments on the policy. However, the investor also receives the payout when the original policy holder dies. This is where some of the risk comes in. If the policy takes too long to pay out, the investor could lose money. However, the investor could also make close to double the investment in some situations.
If you would like to know more about life settlements, you can find the information by clicking here.
Joseph Devine Article Source: http://EzineArticles.com/?expert=Joseph_Devine |
No comments:
Post a Comment