Senior Life Settlements are an alternative asset class that create a natural hedge against many of the forces, most notably price instability and volatility, associated with market-traded investments.

In a career transition in 2000, I was sitting for the Series 7 Exam on the morning of February 1, 2000. Fail and you’re fired from GreatBigOle BD…No pressure. Well, this situation carried a little more weight than the Grade Shame I might have suffered from my parents during my formative years…5th grade was the only thing that kept me out of 6th. This was different. My new professional life was on the line, so I memorized everything.

It’s funny how things stick with you and you don’t know why until later in life, but one retrospectively useless detail that still occupies my psychic real estate from the exam is the acronym CUSIP. The Committee for Uniform Securities Identification Procedures.

The keyword is Uniform. Every registered security in known classes, i.e., equities, municipal bonds, REITs, etc., have a homogenous set of data points with respect to their registration. This means all the data points line up and they can be freely traded on price point alone.

The makers of markets (aka Market Makers) facilitate trading. They put up a great big wad of capital as a counterparty service provider in the Exchange Model to assure execution on both sides of a trade (Buy/Bid and Sell/Ask) for a company’s stock trading business and take a fee (the Bid/Ask Spread) to facilitate the trade. Then, market prices float based on any and every catalyst.

“When you’re a hammer, everything looks like a nail.”

Markets are what we know. PE Ratios, earnings calls, dividend yields, IPOs, bond ladders, etc., whether you know what those terms mean or not, is not the first time you’ve heard them. It’s within the realm of the familiar and that’s comforting.

Alternative Investments, as the name would suggest and by contrast, are something other than “The Usual.” As much as we want alternatives to look, act and feel like what we know, they’re different. They are an alternative.

By now, this audience should have a firm grasp on the basics of how a life settlement works to make money for investors. But what remains a complication for many is understanding the Chain of Custody. Placing money in investments can have many stages for which specialized counterparties are necessary to perform specific tasks.

The settlement business has its own vocabulary, processes and procedures that are foreign to most who see it for the first time. It helps sometimes to compare a new idea with one that’s already familiar to you.

So, what’s more familiar to you than your own home? You went through a lengthy process with specific role players on both sides of the transaction to attain it. Realtors/Brokers, escrow facilities, title companies, closing agents, appraisers, inspectors, etc. are all part of a comfortable process because you’ve been through it before.

A life settlement policy/portfolio investment is actually equity in the policies. An asset just like a home or a baseball card collection. The process of buying life settlement assets is quite congruous to buying a house because of the lack of sameness or homogeneity and the need for role players to perform certain tasks.

Many of the transactional steps and counterparties are similar or the same, but unfamiliar.

Counterparty relationships are necessary to create a structure with accountability and security in the business model. With specific areas of specialty delegated to specific areas that require knowledge and expertise outside of our scope, like commercial banking and a life expectancy appraisal, the overall product is improved by tapping business intellect and clients’ interests are better protected.

For all the benefits a truly non-correlated asset class can bring to your asset allocation, life settlements aren’t the run-of-the-mill alternative, but they’re not as foreign as you might think.

Interested in learning more about Senior Life Settlements? Please call us at 657-254-4300 or send an email to