As the world evolves and investors of all types start to branch out and explore new opportunities to diversify their portfolios one of the areas that stands out to us is the life insurance space, which we’ve been getting inquiries on recently and ultimately sparked this blog post.
You can only imagine the questions we’ve gotten over the years related to investors looking to explore startups, real estate adventures and so much more yet the life insurance space is spurring questions now more than ever based on a wide variety of factors, especially top family offices and hedge funds warming up to investments outside of the box.
Let’s take a step back and weigh the common questions:
Should we invest in life insurance companies to diversify our portfolio?
This is one of the areas where yes, there are opportunities, however it shouldn’t be a focus aimed at morbidity but instead ways to improve the beneficiaries where everything balances out in the end.
And sometimes towards the end of our lives when our kids are grown and successful in their own ways they no longer rely on life insurance from their parents, while at the same time such policies can be acquired/monetized/invested in different ways.
What are the benefits of investing in life insurance?
Private equity firms have had their eyes on life insurance companies for many years primarily due to the analytics/predictability of such investments which are very data-driven, and that’s no different than top Wall Street investors relying on near real-time data to make decisions in the moment when it matters most.
On the flip side, life insurance is a different animal and very specialized, so when clients ask questions there we’re very reserved.
How much should we allocate to life insurance investments?
After looking at the above, if a client is passionate about investing in life insurance companies as one slice of their portfolio we’re here to help though it’s a sliding scale based on the overall portfolio, priorities, expected returns, etc.