In this discussion, Caleb and Kevin delve into the intriguing world of life settlements, a topic that is not well-known to many. Life settlements involve purchasing life insurance policies from individuals who no longer need them, cannot afford them, or simply wish to sell them. The purchasing company offers more than the cash surrender value that the insurance company provides. The purchasing company then continues to pay the premiums until the policyholder passes away, at which point they claim the death benefit and distribute it among the fund's members.
Life settlements began as a legally-supported financial activity following a landmark case in 1911. The Supreme Court ruled that life insurance policies, once past the contestability period, become personal property, allowing individuals to sell them at their discretion.
This practice has become more common over the years, and significant players like Berkshire Hathaway and AIG are heavily invested in life settlements due to their uncorrelated nature to the traditional market factors.
The conversation explains that in a life settlement, an investor purchases a life insurance policy at a discount with the understanding that the return will be claimed upon the policyholder's death.
The life settlement fund that Kevin discusses is set up as a private equity fund with a targeted annualized return of 10% to 12%, net of fees. The fund is particularly suitable for long-term investments, such as retirement funds or those held in trust for future generations.
If you'd like to learn more about life settlements, Kevin invites you to get in touch:
Kevin's closing words to his family would be about love and cherishing each other, emphasizing the importance of family and relationships over everything else. This sentiment highlights the significance of considering end-of-life planning and the legacy one leaves behind.