At Abacus Settlements, LLC we provide Accredited and Institutional Life Settlement Funds and investors a proven structure for obtaining Life Settlement policies. Life Settlements are sophisticated investments and should only be purchased by experienced industry investors. Life Settlements must be purchased by and through State specific Licensed Life Settlement buyers like Abacus Settlements, LLC. We are capable of single policy origination transactions or building large portfolios with a unique set of purchase parameters.
Abacus provides Institutional Investors:
• A Large Inventory of Life Insurance Policies for sale
• State Required Purchaser Licensure
• Strict Underwriting & Closing Parameters
• Broker licensure Confirmation
• Broker Compensation
• Contracting
• Pricing Software
• Access to our Life Settlement Platform
• Ownership and Title Change
• Policy and Premium Tracking
• Tertiary Transactions
Purchasing Strategies
There are many unique strategies that can be implemented around a Life Settlement Investment. The Life Settlement fund or end buyer often dictates the type of strategy they will use for their fund of policies. Here are just a few of the known strategies we help to implement around the product for our Institutions and Funds:
- Traditional Life Settlements – In Traditional Life Settlements, the fund will pay the policy owner a cash amount above the surrender value and below the death benefit. The Fund or Institution will take over premiums for the remainder of the life of the insured. In this strategy premiums are usually optimized to the minimum non level premium possible per year.
- Paid Up Death Benefit – In this strategy the fund will take over only the premiums of the policy for the seller . The seller will receive no cash now. The policy beneficiaries will be assigned a paid up amount directly at the insurance carrier which will be paid at the death of the insured. The original owner will no longer be required to pay the premiums. The fund that purchases the policy is responsible for paying the premiums and will receive the remainder of the death benefit not contractually promised to the seller’s family or trust.
- Annuity Premium Plan – In this strategy, We can help the Institution mitigate longevity risk by purchasing a single premium immediate Annuity (SPIA) on the insured which will in effect pay the premiums on the policy for the life of the insured. This strategy can be coupled with any of the strategies listed above.
- Tertiary Transactions– Tertiary transaction are the purchase and sale of policies that were formerly purchased by other institutions and are no longer owned by the original consumer. Much like Mortgage loans and other investment vehicles, Life Settlements are often resold as a liquidation strategy. We assist life settlement institutions and Funds with buying, marketing, or selling the life settlement asset through our tertiary trading platform.
If you are involved in the life settlement investment space there is a must read non-bias, and compelling study on the Life Settlement asset called Empirical Investigation of Life Settlements Secondary Market for Life Insurance Policies by Professor Narayan Y. Naik and Afomzo V Juanário, from the London Business School.
This paper, published June 2013, is the first to examine settlement transactions by original policy owners in the life settlements market and provides a valuable insight in to internal rate of return (IRR) and the benefit that the secondary market contributes to both investors and the original policy owner.
In a study of 9,000 policies that were the subject of a life settlement between 2001 and 2011, policy owners received more than four times the cash surrender amount through a life settlement, according to a study recently concluded. Aside from the obvious benefits to consumers looking for options with regard to their unwanted or unneeded life insurance policies; Professor Naik’s research also found that the expected rate of return for investors are consistently and significantly higher than treasury yields.
Please call us if you are an institutional or accredited investment company interested in the Life Settlement product.
