In this episode of the ShiftShapers Podcast, host and Chief Transformation Strategist David Saltzman chats with Brian Clark to discuss the company’s perspective on Life settlements.
Brian is the Director of Business Development at Reliant Life Shares and he shares details on how companies handle life settlements, from paying out death benefits to undertaking risk to dealing with government regulation.
Brian also shares how individual investors can participate in this market and changing the mindset around life settlements to see the real value it has to those who need it.
What You’ll Learn From this Episode:
- 02:11 Life settlements: a life insurance company’s perspective
- 04:52 What investors get
- 07:34 Insurance company views and risks involved
- 10:49 Regulation
- 13:59 For investors: How to access the market
- 18:36 Common objections: Finding the value of life settlements
03:21 “Now once it’s sold, the investor group is waiting for the death benefit payout and, in our case, we open up investment on fractional basis to investors, individual investors, because historically the buyers of this have been big players like the Warren Buffetts of the world, Blackstone, national pension funds, big banks, etc but what we do is help individual investors participate in this asset class.”
04:08 “And that’s the true diversification that I think an exposure to life settlement investing can bring to investors when they’ve already got stock risk, they’ve already got real estate risk. And in this low-interest-rate environment we find ourselves in, especially now, what choice do you have?”
08:01 “So, in general, my experience has been they don’t love it. However, I think insurance companies certainly can be seen and don’t want to be seen as telling a senior that they can’t access value in a policy above and beyond what the cash render value is because that would end up hurting that senior.”
08:40 “A lot of times, these are illiquid investments so liquidity should be obviously your primary concern when you consider any investment. The time horizon involved, a lot of times we operate with life expectancy estimates between 3 and 8 years, typically not shorter than 2 and not longer than 8 but a person with an 8-year life expectancy certainly could live twice that long or longer and so longevity risk really becomes a primary risk to the investment.”
16:36 “I’m not going to say that a healthy person cannot sell their policy but the younger the person is and the healthier a person is, typically the less they’ll command for being able to sell their policy because, let’s just use 2 extreme examples, if you were going to buy the life insurance policy off of a 24-year-old Olympian who’s in great health and great shape, I mean how long is that person going to live, right?”
17:06 “On the other end of the spectrum, if we somehow knew I had 5 minutes to live and I have a life insurance policy, obviously you might be willing to pay more for that approaching the death benefit value.”