A life settlement ETF or exchange traded fund is a very interesting concept that looks good on paper but if the key components aren’t what they are suppose to be it can turn another nightmare similar to the Subprime loan disaster that occurred in the past.
Life settlements became very popular during the AIDS epidemic. Many policyholders sold their insurable interest in order to help with medical expenses. Many investors looked at purchasing these policies as a no brainer because the life expectancy of the policyholders was less than two years.
Just as the subprime real estate loans were bundled up and turned into securities and traded on the secondary market, life settlement ETF related funds are also bundled up in large amounts of policies and are sold on the secondary market. The big question is will the faith of a life settlement ETF be the same as subprime mortgages, will it be an insurance bubble that pops based on the inaccurate life expectancies. For more information please go to LIVEpdq.