SOUND INVESTING: Alternative Investment Opportunities for Accredited Business Owners

Sound Investing with Jason Lampa, MBA

More often than not, most investors have tunnel vision when it comes to viewing the entire opportunity set available to them. When they are able to adjust the lens, a new world of investment opportunities open up to those who can understand the difference between perceived and actual risk.

Experienced investors understand that sitting in cash or short-term income notes will not provide sufficient returns in the long-run. Investors are looking for equity-like returns with the volatility of fixed-income. Finding an opportunity like this is challenging; however, there may be opportunity to find such an opportunity in Life Settlement contracts.

A life settlement is the selling of one's life insurance policy to a third-party for a one-time cash payment. The purchaser then becomes the beneficiary of the policy and begins paying the premiums. Typically, these policies have face amounts in excess of $250,000.

Enterprising individuals realized that billions of dollars in face amount of policies were being lapsed or surrendered simply because the insured no longer needed the coverage or did not want to continue with the premium payments. These contracts (policies) were being sold (or even given) back to the issuing insurance company for a fraction of their true value. Should somebody wish to make the premium payments to keep the policy in force and pay the insured a lump sum value much more reflective of what the policy was worth, then that person could become the owner and beneficiary of the policy and realize its benefits at the insured’s demise. That is, in a nutshell, what a life settlement is. An insured sells the benefits of his or her policy to somebody else in order to realize a greater gain from what he or she has paid in so far. After the sale of the policy, the investor must maintain all premium payments in order to keep the policy in force. It is really just a function of contract law; an insurance contract is being bought and sold, much like mortgage contracts are bought and sold. (Global Wealth Management)

Life settlements have gained favor among institutional investors as viable investment options to then in-turn sell to accredited investors. The attractiveness of this investment opportunity is that these contracts are not tied to the stock market or any other index; it is directly dependent on mortality and is independent of traditional financial fluctuations.

Industry experts believe that regulation, demographics and a low national savings rate will drive the expansion of the supply in the life settlement market.

Before putting money into a life settlement vehicle it is critical that you consult with a financial advisor who is experienced in performing due-diligence in this space. There are companies within the life settlement industry that are promising returns of 30-40% annually. They are forecasting these results over 8, 9 and 10 year periods. If it sounds to be good to be true, it probably is. A conservative life settlement program should provide you between 6-8% return over a 10 year period, and can possibly yield more if the contract were to mature quicker than expected. As with any investment there are risks. Please speak to your financial advisor before entering into one of these contracts.


For more information, please visit Jason's TNNWC Bio.

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SOUND INVESTING: Alternative Investment Opportunities for Accredited Business Owners

Holistic Approach to Industry-Specific Networking Group in Illinois

By Matt Anderson

U.S. Great Lakes Bureau Chief
(Ohio, Kentucky, Michigan, Indiana, Illinois, Wisconsin, Minnesota)

I love talking to people who see a need and create their own networking group. Debbie Dudek in the Chicagoland area is such a person. In February 2007 she started WIN, the Women’s Insurance Network.

For those of you not in this industry, keep reading because the methods she has applied could easily work with another profession.

95% of my work is with the insurance and financial service industry and it has long perplexed me how few women there are whenever I present at conferences or work in company offices. As a former manager and trainer with American Family, Dudek knew this all too well and decided to take action.

“It’s a male-dominated industry and women cannot do business the same way men can.” She gave me examples of marketing strategies to contractors and the auto industry that had worked well for male insurance agents in her company that flopped when female agents used the same strategy.

Dudek saw the value in starting a local networking group in Illinois that meets the needs of women in financial services and creating a model that can work in Any Town, USA. Interesting features to this group include:

1. It is a sub-group of a national professional association: the National Association of Insurance and Financial Professionals (NAIFA). Professional development is an integral part of the structure from strategic business planning to how to run a business.

Is there a demographic in your professional association that could use extra support? NAIFA also has a Young Advisors Team to support newer advisors in an industry that has a low retention rate.

2. It proactively invites synergistically-related professionals to get involved. CPAs, business bankers, and attorneys are also members. In other words: great referral partnership opportunities! “I get referrals frequently from other people,” Dudek shared. Could your professional association do a better job of inviting industry-related professionals? It beats joining the local chamber and is often overlooked. What organization doesn’t want more members?

3. Its personal development component. The monthly topics have included goal setting, how to say no, how to deal with stress, time management and dressing for success. These are almost unheard of topics for a traditional NAIFA event. “Many women in the industry are single moms who are struggling with many different things.

As someone who coaches advisors in this industry, I have to say that I find the above topics are also challenges for males (with the exception of saying no). Maybe our society has different expectations of men and women; I can see this model for meetings taking a pioneering role in the association and moving it and its male-dominated companies into the 21st (or do I mean 20th!) century.

What I love about this is that it raises an interesting issue: Should your professional organization try to help the whole person? WIN’s mission is: Empowering women professionals to be successful in servicing the financial services industry. Plus, from a referral standpoint, a strong center of influence has to be someone that you like. Personal development topics open those doors much wider.

Is it acknowledging a new trend that most people want a one-stop shop for a professional organization because we don’t have the time or desire to commit to multiple groups?

4. Its vision. Not only is it a resource organization for women in financial services but it has developed a turn-key system so women around the country can do the same thing without feeling like they’re adding an overwhelming commitment to an already crazy-busy life.

5. WIN’s holistic approach. It is designed to deliver all the success tools: “It’s something to help women feel comfortable in the industry” not just personally and professionally but providing the support, motivation and inspiration with a distinct female perspective.

6. All presentations must be interactive, not lectures.

The one thing that is not turn-key is each group does need one or more people on a local level to promote it actively at other networking events and within NAIFA so that other professionals know about it.

But between the personal, professional and referral benefits, WIN meets an infinitely wider variety of needs than its traditional counterpart. Is your professional organization growing and adapting?

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Holistic Approach to Industry-Specific Networking Group in Illinois