Examples of Life settlement investment funds
Investors also known as risk takers, they are the finance entities as they provide the capital or finance for the life settlement transaction that is providing the cash for the purchase of the life insurance policy. Investors might use their own capital to purchase such policies or they may arrange the fund through other investors undergoing through a variety of structures. Life settlement providers are the entity that enters into the transaction with the policy owners for purchasing the policy and in return pays the owners when the transaction is agreed and closed. In most of the cases the providers have a written agreement with the investors underlying the fact that they will be providing with the fund needed to acquire a policy. This shows that the Investors are the ultimate under for the monetary transaction however in some transaction the provider itself acts as an investor and uses it own capital to purchase the policy for its portfolio.
The most common types of funds in the life settlement investments are the Hedge funds. The US investing companies buy discounted insurance polices from elderly individuals and collect the full value of the policy after the death of the policy holder. Other types of funds are the Global Macro Hedge funds in which managers anticipate the global macroeconomic trends and make profit by trying to bet them. Multi strategy hedge fund is another kind of fund where the managers use various strategies to get profit from the same pool of assets. Other types of funds are the green hedge funds, Event driven hedge funds and the African Hedge funds.
Benefits of Diversification
In the current recessive economic era life settlements provide market competitive returns and in some cases they also yield above average return. With the diversification portfolio of a life settlement investment there is an improved risk metrics for the investor as a result the investor can vary risk and result thought out the life cycle of the investment.