I have received information from U.S.-Financial Resources Inc. concerning its "Absolute Assurance Life Settlements" program. The company "guarantees" (through insurance by Lloyd's of London) both principal and profit (10.5% to 12.6% annual).Basically, the company offers "insured return life insurance settlement," which means buying the beneficiary rights to a life insurance policy of someone whose life expectancy is between three and eight years.Aside from the morbidity of the concept (the company says its program does good things for the near-dead by helping pay off medical bills or giving them one last fling), does anyone have thoughts on this? The minimum investment is $10,000.With CD rates in the 3% to 4% range and money market accounts in the tank, this sounds too good to be true.Anyone have any comments -- especially anyone with experience with the so called "viaticals?"
Don't do it! I have heard stories where the insured patients (usually with AIDS) can and do live far beyond the expected few years as per the prognosis. The doctors and improved medicines and easy access to medical trials allow longer survival rates than expected, even when everything is on the up and up. Plus you must worry about the long term solvency of the brokerage putting the financial product together, no matter what "guarantee". Last but not least it may put you in the position of rooting for the death of policy holders. Some investors have been known to wait decades.
Thanks to all who commented on viaticals. You all make sense, but what struck me most was the thought that I'd be hoping for someone to die, and the sooner the better.
Dear fooldaveonce:I would echo the advice about checking the company issuing these viaticals--with a very, very fine-toothed comb. The simple fact that they indicate a range of possible returns calls into question the strength of their "guarantee."There are lots of other ways to get returns in the 10-11% range--with no guarantees, but with reasonable safety. There are REITS, oil/gas/timber royalty trusts (and some other master limited partnerships too--all traded on the major exchanges like stocks), as well as high-yield bonds (not many of which can acccurately be called "junk)." Check them out using a high-yield screen.I have about 37 percent of my retirement money in these things, and for that reason (and some prudence in choosing equities) I don't have a loss for the past two years...even after taking out about $4000 a month for living expenses. I'm back down to where I started in mid-1998, but no real LOSS (and a lifetimes's worth of tax-loss carryforwards, for what it's worth).Yrs., posthorn
Thanks, Posthorn. I was leary from the beginning, and other fools indicated there were options. I politely refused when contacted by the company.
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