How to Invest in Texas Life Settlements
Texas heavily regulates life settlements. A life settlement is an investment in a life insurance policy. This type of investment requires that the original policyholder assign his policy to a life settlement company. In exchange, the policyholder receives a cash payment, and an investor can invest in the policy. In essence, the investor is investing in the insured's death, since the investment only ever pays off for the settlement company when the insured dies. If you want to invest in a life settlement in Texas, you must follow some rules outlined by the state.
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Instructions
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Assess your financial situation. Life settlements are generally for high-net-worth investors because of the risk involved and the substantial cash outlay required. Many firms do business with individuals who have a net worth of at least $1,000,000 and an annual income of at least $200,000 per year.
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Call several life settlement companies on the Texas approved list of life settlement companies (see Resources below). These are the only companies approved to deal in life settlements.
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Choose a life settlement company that will offer you the best potential rate of return with the least amount of risk. Ask about the company's insurance portfolio and inquire about the average rate of return for investors. Find out which types of policies the company mostly purchase (term insurance versus cash-value insurance), as well as the individuals they purchase them from (terminally ill versus senior citizens in decent health).
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Send payment along with any paperwork required by the life settlement company. Once the company receives payment, you wait to collect on your investment. When the insured individual or individuals die, you will receive money from the settlement company for the underlying life insurance policies.
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References
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