An academic paper written by Edward S. Adams, analysis all aspects of the asset class and considers life insurance assets to be part of the stable of alternative investments. He encourages investors to consider life settlements as part of a holistic view for their investment portfolio.
Abstract: “The Emerging Alternative Investment – Life Insurance Assets outlines alternative investment options with the emergence life insurance secondary market of for investors seeking asset diversification to mitigate and diversify risks. Traditional asset classes no longer provide the diversification that investors require. Specifically the paper examines asset diversification through uncorrelated, alternative asset classes – real estate investment trusts (REIT), equipment leasing, energy exploration, and life insurance assets found in the life insurance secondary market. Life insurance assets should be considered within this stable of alternative asset classes because of their ability to add further diversification from other assets classes – both alternative and traditional. Because life insurance assets are tied to mortality statistics, these assets are uncorrelated to other asset classes. Thus, investors should consider a holistic approach to their investment portfolio including alternative investments. Life insurance in particular may provide greater asset diversification for investors seeking asset classes that are uncorrelated to the volatility of other assets in order to mitigate and diversify risks.”1
[1] E.S Adams, 2013, The Emerging Alternative Investment- Life Insurance Assets, pp1
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