Over the past few years life settlements have become a more attractive investment opportunity and there is an increase in the amount of hedge funds which are being formed to invest in various life settlement strategies.  This article will discuss life settlements and will introduce some of the issues which hedge fund managers should discuss with their attorney if they want to start a life settlement hedge fund.

From Viaticals to Life Settlements and Premium Finance

Life Settlements are the younger sibling to the Viatical industry which was popular in the 1980’s with regard to AIDS patients (see SEC description of Viatical’s below).  A “life settlement” usually refers to a secondary market transaction on an insurance policy.  Typically an insured will sell its insurance policy to a third party (the investor) who will pay the insured more than the cash surrender value of the policy, but less than the death benefit.  The investor will then be liable for the premium payments and will receive the death benefit upon the death of the insured. Continue reading →