While life settlements provide policyholders with an opportunity to receive cash from their unwanted life insurance policies, they are also beneficial for businesses in need of additional capital during the recession. In order to benefit from this type of collateralization, investors need to designate a certain amount of their investment funds to purchasing life insurance settlements. A senior life settlement portfolio will then produce principle.

According to many senior life settlement brokers, these settlements provide a guaranteed payout. However, just like any other financial investment strategy, there are risks involved. When an investor purchases a life settlement, they are required to pay the premium until the original owner dies. In addition, many investors have been victimized through fraud. It is important to choose a qualified and experienced company to handle such a transaction.  Recent revenue rulings may be the beginning of a new era for life settlements. On May 1, the IRS issued RR 2009-13 and RR2009-14—two revenue rulings that deal with life insurance settlements, Web CPA reports. The former provides guidance to policyholders who sell their life insurance plans, while the later offers guidance to the investors who purchase them. How much guidance will be provided is not clear at this time, however, it may be the answer to making sound life settlements investment options.

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