Only two certainties in life: death and taxes. It’s a well-worn cliche, but in the case of the secondary life market, death just isn’t certain enough.
Both supply and demand for this hotly-contested after-market are ballooning. Investors are gobbling up life insurance policies from third parties, and collecting death benefits when they die…if they die.
Policyholders are now living longer than ever, and not dying quickly enough for the buyer to recoup on their investment.
Retirement Value, a Texas firm specializing in this field, was closed down by regulators this year, and will only be on the hook for 10% of payouts promised to over 900 investors.
This is a common mistake in the secondary life market: Without death, there can be no return on investment.
Betting on a stranger’s death is risky, as this Texas investor discovered. Managing risk may not be the sexiest component of an investment strategy, but it is just as crucial as chasing street-beating returns.
To find real success purchasing fixed income annuities and structured settlements on the secondary market, it’s best to steer clear of death-centric payouts.
You can bet your life on it.