What is the Effect of Today's Economy on Life Settlements?
The Future is Bright

We are all affected by the extraordinary domestic and global economic conditions causing the current capital market crisis. The mainstream status and legitimacy of the life settlement market has largely been fueled by institutional funds that purchase life insurance policies in the secondary market. However, the balance sheets of those funds, which are intimately tied to indexes all over the world, have been deeply impacted as well. So, have allocated funds earmarked for life settlements been depleted?

The simple answer is "no," although in the immediate short term, there will be a transition period whereby funding sources will need time to reallocate assets and adjust accordingly to the changing climate. The long term future, however, is bright and fertile for unprecedented growth and marketplace entry even if, as difficult a pill as it would be to swallow, market conditions worsen. Why?

Investments associated with life settlements are immune from and not correlated to the fluctuations in the stock and bond market, interest rates or oil prices. An investor's yield is time not economy based and the purchase of existing policies enjoy the same regulatory protection and consideration available to owners upon issuance. As a further indication of the investment's attractiveness, life insurance companies continued to pay death benefits and disburse funds during the Great Depression!

Welcome Funds is positioned to capitalize on the short and long term effects discussed above. "It's more important than ever to maximize competition among providers with each and every policy," says John Welcom, President of Welcome Funds, emphasizing that the relationships his firm has with more than 40+ providers is unmatched in the industry. "We are continuing to seek new relationships because providers all experience periods during the year where they are not aggressively purchasing policies. That's why an advisor can't use a handful of providers - for example five - if he takes his fiduciary responsibility to the client seriously. The client needs as many options as possible and such options should only be restricted by due diligence and state requirements, not a unilateral decision by the advisor that "x" number of providers is enough."

Commenting on the long term effects, Welcom added that he continues to encourage providers to attract new capital sources and that they have an affirmative duty to diversify the institutions they are representing. "The climate is ripe for new players to take advantage of the non-correlated characteristic of a life settlement investment and responsibly enter the market. Providers cannot rely upon a few relationships. They need to be as proactive as we are in exhausting all possibilities to increase institutional demand for the new asset class."

For more information about the life settlement marketplace and current trends, please contact Welcome Funds.