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173: What Worked During the Great Depression?

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Buck: Welcome back to the show everyone. Today my guest on Wealth Formula Podcast is Tim Wright. Tim is the vice president and senior partner of ASR Alternative Investments. Of course Tim’s been on the show before talking about life settlements. Tim welcome back to the show.

Tim: Thanks Buck. Thank for having me back. Always a pleasure to be here.

Buck: Yeah it’s great to have you and you know I think it’s good timing in some respects to have you now because there seems to be so much uncertainty in the market there’s so many issues with regards to people being concerned about an oncoming recession and all these things and and it brought me to thinking about again you know what what do people invest in in times like these you know and these days it seems like most people think of you know life insurance as nothing more than just that insurance for like when you die right you’re right? But life insurance has had a very long history as an investment and that’s one of the things I want to talk to you about in fact going back to you know the depression and what surrounded that people who survived for that period of time really were you know jamming money into life insurance companies life insurance policies and cash and really nothing else I wanted to see if you could kind of add some historical perspective to that because I know that’s you know a big part of kind of your approach to life settlement space.

Tim: Yeah Buck and if you think back to the depression what was going on there was certainly insurance companies have been around since the mid 1800s and there was trust that was being built over time but then it shifted when when you had your you know the American public was going out and buying homes where’d they get that money from they got it from banks so they really learned to trust banks and 1933 was the biggest hit I think four thousand banks collapsed in 1933 but all in all during the Great Depression there were like nine thousand banks that closed and I know we were really concerned about the Great Recession from 2007 to you know 2009 ish. Well there’s a 450 banks that closed during that time so I think people got reprogrammed because the one place you could go and you could put your money with it and you can still withdraw or insurance companies even during the Great Depression.

Buck: Right I mean specifically because I think because the insurance companies did not have very much as I understand it exposure to the volatility of the stock market etc they were holding real assets like they are today. They generally did just fine and so of course mentally people who lost all their money in the banks they didn’t have the same faith in banks the way that that we might today because we think hey gosh you know the FDIC is out there to protect us and of course there’s no way if I put money in a bank that it’s guaranteed for me. So obviously you know we’ve got people living through the Great Depression and they had a good reason for all the reasons that you talked about trust in life insurance companies I think you know through the Great Recession for example there was no insurance companies that went out of business and so they had this trust in insurance companies probably more than banks but how about today? Okay let’s let’s move on today what makes life insurance companies and I guess they’re for investment into life insurance policies, a relatively lower risk investment compared to you know other assets

Tim: Yeah so if you think about, oil companies and banks and you put all those assets together and then when you compare that to insurance companies oil companies and banks pale in comparison to the size of insurance companies in America in a worldwide people don’t realize that. So when you think of just the mass size of the industry then you think about where the vast majority of companies in our country especially the institutional great paper they’re all legal reserve life insurance companies okay. I’ll say that again legal reserve life insurance companies. And the reason that’s so critical and I’m sure everybody that has insurance has a policy with a legal reserve life insurance come at John Hancock, Mass Mutual Pen Insurance they’re all their own legal reserve. The reason that’s important is that basically the government sits state-by-state they come in and they basically say you need to meet these requirements in your cash reserves in order for you to sell policy under this banner of being a legal reserve life insurance company. So why is that important if we get into trouble or our insurance coming gets into trouble we have that backing and when it comes to getting we’re not there yet we’re talking about buying life insurance policies, well who is your partner in all of this well the biggest partner who’s backing it are the insurance companies themselves so that speaks to the power of why life settlements we’re gonna talk about it is so great.

Buck: Yeah so life insurance typically, I get this question sometimes like what you know what happens with a life insurance company if it quote unquote goes out of business and goes that reserve. So first there’s obviously there’s an inherent value in its assets visa V the the the life insurance policy so presumably those that’s level one those get gobbled up they’re gonna get gobbled up from another insurance company who’s gonna want them and buy them at a discount, great deal for them as a client you don’t notice a difference you still got the same policy. I guess the other thing that you were talking about in general is the you know incredible strength of these companies themselves you take like Pen and MassMutual have been around since the 1870s and have been paying dividends out since the 1870s with you know when to that and then there’s also reinsurance as well right and then after you get past all of these layers there is this FDIC type layer that you’re talking about is that correct?

Tim: Yeah it is and if you think about you know people have this confidence that hey I’ve got a bunch of money in my local bank and it’s FDIC insured and you know what for the most part unless something really crazy happens that $250,000 of coverage will be there but if you have five hundred or a million dollars in your bank account that’s not covered. So that’s I think people underestimate the power of insurance because if I have, let’s say I do have a policy and I have a million dollars of cash value in there well guess what that’s all going to be picked up. If there was an issue with the insurance company there would be a merger that company would come in and like you said gobble up all those policies because here’s the real fact about insurance companies they cannot afford bad press if there were four or five insurance companies let’s say big names that went out of business this year, well how much insurance would be sold just based on the fact that those companies went out of business there’d be a lot less I don’t know how much but you and everybody else myself would have less confidence in it so if there’s a struggling company it’s gonna get gobbled up because those policies need to pay off as people pass away that’s critical.

Buck: And as a corollary to that you know the other thing that I hear about sometimes especially in discussions of life settlements, we’ll get into, but also in terms of insurance policies when they buy insurance policies right and invest in insurance policies we do a lot of you know within our community our network we do a lot of cash flow banking, Wealth Formula Banking and it’s you know it’s something that we generally benefit what for while we’re living but there is a whole death benefit of course where these things are initially designed for in the first place. That is an investor you may not be thinking about but as important to your family when you plan for this kind of thing people sometimes when they are thinking about that and our first buying it especially in life the life settlements basically say well what happens if the insurance company won’t pay the death benefit what if they find out that there’s some circumstance that makes it so you know they don’t pay. How common is that in in reality and you know what are the circumstances of that it you know in your perspective?

Tim: Well it’s extremely rare and it’s due to two words: contestability period. Those two words are critical in a payout of a policy because the contestability period in America is two years the insurance company has two years to find faults they have to find fraud to find issues that would cause them to basically decline a payout of sum of some kind. When the critical aspect of there’s a number of them but the one big one that’s first and foremost when you’re buying a life insurance policy from somebody else it’s got to be beyond the contestability period because we there are case law in this country today and not that we’re out buying fraudulent policies far from it but there have been others bad actors and every industry we know that that have gone out sold of fraudulent policy the insurance company didn’t catch it for three years the person died and guess what they filed a claim. Well they denied the claim initially they go to court and the court says no no mister insurance company guy you needed to figure that out in two years therefore we’re going to pay you’re gonna pay the death claim. So there’s case law in extreme situations but the real piece is just make sure that you’re buying it beyond the contestability period.

Buck: So let’s move on because now we’re I guess we’re specifically talking about life settlements you know and as I’ve said before I’m a big proponent of over fronted permanent life insurance as an investment strategy we’ve done several webinars and podcasts on that we call it Wealth Formula Banking however there is this other way that you’re talking about and I want to dive into that a little bit more in a more granular fashion which is to get exposure to life insurance policies using incredibly stable assets that have got a probably there’s nothing with a better track record over the last hundred years or more 150 years but to get exposure to that super stable asset class but not benefit from just the cash value but the death benefit right the part that you usually don’t see if you’re buying things for the purpose of investment. So tell us kind of exactly how that works what exactly is a life settlement and you know what makes it is this legal that’s the other question people get what you know what makes this all possible where did it come from?

Tim: So one of the reasons that I personally have invested in this and all of the partners here at ASR have is that it’s really simple it’s easy to understand there’s not a lot of moving parts and you think about all the different complexities on Wall Street today a lot of you could have you know 50 different products just based on mortgages I mean it’s really complex. Life settlements pretty easy. What is it? It’s the sale of an existing life insurance policy. Say Bob here is 83 years old he doesn’t need or want or can’t afford his policy anymore so he goes to his CPA or his financial planner and he says Bob why do you have this it’s costing you thirty thousand dollars a year you don’t need it anymore let’s go to market with it. Bob says I don’t even know you could do that well it hasn’t they go to a broker the broker then figures out how much that policy is worth they do all the HIPAA release information they get a value there they get life expectancy analysis done and then they go to life settlement providers there’s about 25 of them in the US today that are good sized and those lifestyle.

Buck: Life insurance providers right?

Tim: There will their life settlement providers.

Buck: Right and they’re they’re effectively sort of like real estate brokers or for life insurance policies.

Tim: Yeah I kind of look at them as like the title company within the real estate industry they’re kind of the middleman that work with the selling agent the buying agent they’re doing all the financial underwriting so they play a really critical role they’re licensed with the state in which they operate in. It’s really important I said another way you would never buy a policy without going through a licensed life settlement provider that would be a dangerous thing to do.

Buck: And curiously like you say that but I have actually met people who have done that and you’ve got totally burned and what’s happened in those situations I remember talking to a doctor in my investor club who was talking about how he bought two life insurance policies from a guy who was selling them he was basically brokering them like one you know like he was just going out and finding people according to him who wanted to sell and he would sell them two doctors who are usually a great target for stupidity and fortunately in our world I mean I’m a doctor’s I can say but but and and and neither one of them paid out for whatever reason and it turned out they were basically fraudulent. So how does going through the right life settlement provider in this case how do you how does it make it a safe and I guess you know bullet proof way of doing this where you don’t have to worry about the legitimacy of a policy?

Tim: Well and that’s exactly what the provider does if you were to buy a house if you sold me your house as much as well as I know you and I trust you we’re still going to go through a title company right we’re still going to get the title insurance we’re going to make sure there’s no liens there’s no encumbrances we’re going to do all that because that’s what the title company does. By going through the license provider what you’re basically getting there is a financial underwriting so you’re good they’re gonna look at liens they’re gonna look at the contestability period they’re gonna see that the person that we’re buying is showing his net worth at five million but reality maybe it’s five hundred thousand you know they’re gonna look for fraud they’re gonna see if there’s an open suicide clause in that is a lot of people don’t know that if somebody dies beyond the contestability period or even within the contestability period with most insurance companies if you were to commit suicide for example it’s still going to pay out people don’t realize that. Well even if you’re three months into it or six months into it is all there’s no foul play involved if there was a suicide in 99% of coverage it would pay out now that is and so beyond the contestability period for sure it’s gonna pay out but every once in a while you’ll find an insurance company that has an open suicide clause in a policy and that basically states that no matter what you could be 10 years in the policy if you’ve committed suicide it won’t pay out. We obviously avoid those types of policies those are things that a provider there’s about 30 different things they check on but before a buyer like us would say yep we’re good let’s go ahead and do it.

Buck: So in effect they are they are doing all of the due diligence yeah for you know for real buyers to the extent that there’s a there’s a consensus that you can trust these people when you go to these things you’re sitting at the table and you’re bidding on them against other buyers is that right? Who are the buyers typically?

Tim: So the number is not going to be exactly right because you never know what it is but about 95 percent what we would estimate of the buyers in this market are institutions. You know there are hedge funds they’re big they’re banks their insurance companies even to some extent and so those that gives the companies that we’re bidding against. There’s also may be some individual family offices those kinds you’re typically not finding a retail type investor even if you’re worth a few million dollars out just buying policy. So it’s a market that is nice in that sense that you don’t have tons of competition but that’s basically who we’re bidding against is institutions.

Buck: Yes so in that I know I’ve heard some of the big players for example Berkshire Hathaway they’re a big buyer in these and I think Bill Gates has got a half a billion dollars or so and these types of things is that that’s not about right.

Tim:  Yeah it’s and again those things that we hear over the years I’m sure that they’ve bought and sold AIG was you know controlled by Berkshire Hathaway for a long time and AIG at one point this has been a few years ago they they owned actually 50% of all the life settlement death benefit in the space if you think about how big that is and we’re talking about fifty billion dollar market give or take because again most these companies are not public so you don’t really know what the numbers are but yeah fifty percent of the space at one point was owned by an insurance company.

Buck: Yeah so I mean that yeah that’s crazy weird. So let’s talk about where real quick where do these policies come from anyway or they typically you know. I’ve seen some commercials lately of people are basically advertising are those the companies that go out and you know basically do the first round of you know trying to recruit these policies and then they go up to those life settlement providers or are those the life settlement providers themselves the ones on TV doing the commercials?

Tim: Yeah so we look at the advertising that’s going on right now is real positive because it’s creating awareness but Coventry Direct which is what you’re going to see on TV they’re basically the broker for Coventry. Coventry is the largest provider in the country. They do probably the majority of the institutional work for hedge funds and things like that so that’s where that originally is coming from when it comes from. Your original question was where are they coming from? 

Buck: Yeah I mean like who I mean you know the typical person selling these things I mean who are they targeting on these commercials? People who just don’t need them anymore?

Tim: So there is a huge percentage of America that has insurance okay estimated 17 trillion dollars of life insurance in America today in force. So that that’s term policies which are huge obviously variable life index universal life and whole life. Well within that that 17 trillion you have a small percentage of people that bought policies for purposes per state planning purposes okay. It might be a key man policy so you and I own a business and we had a couple of insurance policies taken out on us. So these policies are one three to five to 10 million dollars they’re bigger bigger pterence policies and they get to a point in their lives that it might be 80 it might be 85 or even 90 where they really don’t need it they they’ve outlived the usefulness of them now if it was five years ago or ten years ago somebody that’s really sophisticated still might not even know about life settlements but today the financial advisors and the insurance agents and the CPAs they’re very much aware of this so if you have a CPA and you go to them and say listen I’ve got this big policy they’re gonna tell you hey listen let’s explore the options so we should we sell it should we you know what should we do with it so so that’s where it originates and then the CPA or that person of influence in their life would basically say well let’s talk to Bob the broker the life settlement broker not the lifestyle provider but the broker and let’s see what Bob says about this policy maybe it’s not sellable maybe it is maybe you want more for it than you can get or a lot of different scenarios but Bob the broker would then take the information and then start vetting all the information how to determine if it’s a sellable policy.

Buck: Got it. All right so let’s talk a little bit specifically about ASR and first of all how did it ASR you know we work with you guys but in terms of your history do you guys all did you start with just life settlements you start with other things.

Tim: So ASR 2005 we started as our 14/15 year of business we started with our two founders Rich Depalo and Joe Marquet both Air Force Academy grads they were both airline pilots you know it’s funny how things kind of come together but they were furloughed back in the early 1990s so they both started a second career one it was a mortgage business one was an attorney. And they met each other back in about 2004 and Joe who was an attorney he was estate planning attorney and so he had clients coming to him and one client came to him with life settlements believe it or not and it was in a different form at the time and that form’s long gone but it intrigued him enough to go let me look into this let me let me dive into what this asset class is. He got excited about it ran into his friend Rich and said we need to talk and that’s basically how it all started. So we are a financial wholesale firm we work directly with advisors obviously like yourself and we recruit we train we support advisors from all around the country we don’t work with individual clients directly we leave that up to you obviously as you know. But that’s basically how it started we do a couple other things but I would say 95 to 98% of our overall business are life settlements.

Buck: As you mentioned the investor club it does work with ASR. I want to talk a little bit about you know there’s different ways to approach this market and we talked about Berkshire Hathaway and you know them buying a ton of life settlements every year I can’t remember how much it was like five hundred four hundred five hundred million dollars per year but what I found interesting and I’m about this was that the way they approach this apparently is you know they just buy a lot of policies and then some of it’s not just you know holding on until somebody dies but there are arbitrage in these things too you know they’re basically saying we’re gonna buy will buy whatever people are selling if they look like quality policies and then you know in some cases we’ll just hold them for four or five years and you know all of a sudden they’ll be worth more because somebody’s older and so they’ll do arbitrage that way. So there’s certainly more than one way to you know to to profit in this business what is ARS approach I mean in terms of what’s the theory behind it?

Tim: Yeah it’s great question so there’s primary purchases and there’s secondary purchases it’s called tertiary purchases and we don’t discriminate if there’s a good deal in the primary side or the tertiary will purchase on their side. But in terms of the buy box we are very particular you know maybe it comes from our background of the Air Force Academy with Rich & Joe but we’re very conservative and pretty much everything that we do for example you could find some companies out there that maybe our institutional buyers they want to buy a seventy-year-old with stage-four cancer and and and take that risk that that plays out for them and they make a profit. We’re in a different position mainly because we’re working with your clients’ money so our buy box is much more conservative we want an average age of 85 okay. That might be 80 might be 90 we’ve got them all but 85 is kind of our average. The life expectancy which is done by outside companies we’re not it we’re not we’re not doctors we don’t claim to be doctors we use actuarial there’s companies like 21st and ABS that are really good at what they do so that life expectancy always comes back in months. We want to see roughly an average of 60 months or so okay we have something longer we have some are shorter but average 60. We want US or Canadian citizens that have their policy originating here in the United States. We will only by institutional break paper so A and above we’re not going to buy C paper because then you run the risk of what we talked about earlier and we’ve never had an issue with with a policy not paying off so that’s partially or probably solely due to the fact that we’re buying the best paper that you can buy out there I mean these are companies like AXA and John Hancock and MassMutual I mean if you looked at our portfolio policies that’s who we buy we’re not buying like I said C paper. So that’s that gives you an idea try to think would also be in the buy box that’s pretty much it and of course one of the most important things that must be there in fact if you ask our acquisitions team what’s the most important thing that you’re we’re looking for when we buy policies its premium flow okay. This policy on the outside mailer grade perfect age perfect face amount but if the premiums are 12% of the face that makes no sense and we can never buy it so the even you might say well what about the price well the premiums are all within the price so you have to make sure the premiums are built correctly or it just doesn’t make sense so that’s a little bit about that.

Buck: Yeah and that brings up a good point because you’re buying an asset but you know you still have to pay the premium that’s right here so that got to be part of the equation so even if somebody’s buying an individual policy from somebody else I mean if you stop paying well and you’re gonna be in trouble. So there’s like you’re designing a fund how do you make sure that you don’t run out of money so to speak and and all of a sudden not have enough money to pay premiums how do you do that?

Tim: Well I’ll tell you the aggressive way and I’ll tell you the way we do it because we’ve seen this done and it’s not a good scenario if we were to buy policies and let’s say it’s part of the acquisition cause only build in one year of premiums, well on the second year because I just mentioned life expectancies five years right doesn’t mean they’re all going to go in five years but you could have some earliest and belong but by year two in that scenario you’re going back to all of your clients and collecting the next year of premiums by way of a capital column that’s not good. We have never done that and we don’t plan on doing that that’s not good. So what we do is we take an opposite approach we say listen let’s be conservative and let’s build in four or five even six years of premiums within the policy acquisition so we’re not having to go back to your clients for a capital call then what we do is when policies mature someone that’s our fancy way of saying somebody passed away as you know when somebody passes away and there’s a death claim and let’s say it’s let’s say it’s a three million dollar death benefit that gets paid out what we need in our premium reserves at all time is at least 10% of the current death benefit okay. So let’s just use easy math and say that the current death benefit is 20 million dollars now because we have that three million dollar mature so it’s 20 million dollars okay so we need two million dollars in premium reserves if there was two million in the reserves and the three million dollar policy matured now one of the account we pay it all out every every single penny would pay it out. But let’s just say we had 1.5 million dollars in the premium reserves okay and we just have the Jones policy mature for three we would take $500,000 put it into the premium reserve and pay out the other two and a half so clients pay the two and a half the 500,000 goes into the premium reserve to keep it at ten percent. Now that’s still the clients money it’s still part of what they’re investing in but we elect to hold that back so we’re not in a pickle about a position where we have to do a capital call.

Buck: You also mentioned which I guess helps with you know mitigating some of the risk here, because one of the risks frankly is somebody living way too long or a lot longer. Yeah as is to have multiple people in a fund so that way you are you know sort of you know some people may dial or early some people die on time and some people die late I in that is that is that typically kind of at the you know what’s the pattern on these things I mean if you have like seven people in this is that kind of what you see I mean I know it’s even hard to predict that kind of it but is that I mean is that kind of what you’re seeing?

Tim: Yeah I mean really what you’re trying to do all this whole thing you’re trying to create diversification at every level possible. So it’s not all females it’s not all males it’s a mix we try to weight it more toward the men no offense men that’s how it is. We also look for policies with various insurance companies so and again it’s never happened but a worst case scenario if we bought all AXA policies and we had seven AXA policies and they had problems then what would happen right so we try to really mix that up we we look at different size policy so we would say our average is about three million that’s the death benefit but you might see one that’s four you might see one that’s one and a half you’re going to see various various levels of diversification within that portfolio of policies.

Buck: Yeah so let’s talk just sort of nuts and bolts like so you’ve got this you’ve got this fund it’s a master fund or whatever and you’ve got you know six seven policies in there you’ve got some investors. So basically what happens is that every time you know somebody expires there’s effectively sort of a dividend paid out for that portion of the policy to which people is that kind of how fun like this would work? Do you design this in such a way that you you know cap the time in terms of how long you know a policy fund might go and is that usually the plan?

Tim: Yeah so I’ll get into that get into the weeds a little bit because I’m sure some of your folks listening, the doctors especially want more of the detail. We use what’s called a fund of funds process so what happens is you know buck here would have a sub fund and he would raise as much money as he could but we also have let’s say forty other advisors like Buck that are out raising money as well and their practice and they’re not related at all, it’s just they also see the value and having their own fund. Well when Buck and all the advisers raise money that’s going into a client account right so if you have an IRA for a hundred thousand dollars that gets into an escrow account that money gets moved into Buck’s fund and then the client you as a client would own a share you would own units of Buck’s fund of his sub bond and then what happens is buck takes that money $100,000 and he invests that into our master fund so everything we were talking about earlier about buy box and buying policies, our company ASR alternative investments is the company that has the master fund that’s out buying the actual policies so Buck’s fund invests into the master fund Buck’s fund has a pro rata share of our fund. So now if we reverse that and again that Jones policy we talked about maturing happens let’s say it’s all going to be dispersed and let’s just say for easy math sake Buck has ten percent of the fund you know we’re eight we have a 10 million dollar fund you raised a million and that 1 million dollars represents 10 percent so now we have a policy of 3 million dollars that’s getting paid out you’re getting three hundred thousand dollars and you will then disperse that to everyone everybody else on a pro-rata basis pretty simple. Can we just address one more thing too. You asked about the timing of it and I know that you know this but for all of your listeners all the funds that buck would do or all 12 months 365 days. So like I know you have a fund that’s ending September 8th or 9th it’s coming up and so basically what happens in that fund, a new fund will open up say September sometime in September and there’ll be a straddle in effect because you’ll be invested in two funds but the key is your fund is open for a year, our fund is open for 12 to 18 months roughly.

Buck: Got it. I want to make sure that we kind of cover some of the main you know the things that you want to talk about but is there anything else you know that you think that’s important to know about life settlements that maybe people don’t understand or the way that you think of this in the context maybe of you know the economy now or you know where does this belong in a portfolio?

Tim: Yeah well the number one thing that we love so much again I told you in beginning this podcast that I’ve invested a lot of my money into this because of the simplicity of it but it’s really more than that it’s really due to the uncorrelated nature of life settlements. I mean I own a bunch of it everybody here does and regardless of what the market or any economy does it just doesn’t matter I know what my death benefit is going to be and I love real estate I own real estate but I also know that if something happens like last week and it just kept going, we had a real rough week obvious in the market and that causes a recession it causes you know a real crack down in the in the in the markets that my house that’s worth say the five hundred thousand could be worth four hundred thousand for fairly quickly. With life settlements life insurance policy that death benefit never changes. So you know you have that uncorrelated nature plus the fact that I have an exit strategy I know that whatever I invested I know that the death benefits going to be X, plus the fact that it’s backed by insurance companies the fact that I’m getting you know a targeted yield that is very attractive in today’s market you know. I would say one thing you know with when it comes to what people might not understand about the industry let me just address that real quickly what you know we’ve been doing this for a long time and I think the awareness is helping this about what I’m going to say but you do have people that hear this for the very first time Buck and you know this right that people say well gosh you know what that seems morbid so let me get this right you’re waiting for somebody to pass away before you benefit financially that seems real morbid and it really couldn’t be further from the truth. I just want to address one thing with you and that is that when people are selling their policy these this is a sophisticated sale by the way it’s like selling your house. This isn’t just like handing over a deck of you know documents saying take it it’s a big transaction. But the reality is the people that you’re buying it from you’re doing them a huge service by liquidating a portion of their estate and in some cases they didn’t even know they had. Let me give an example we’ve had situations where people you know life changes and they need liquidity and they don’t have it well they sold their house all the friends and neighbors because we all care about that probably too much in our society would absolutely know that I’m having some problems. If I belong to the country club right these are affluent people I brought the country club and I no longer belong to us they can’t afford it you know I’m having some channels they sell my cars i downsize and other ways in my life when you sell your life insurance policy nobody knows. It’s the most discreet transaction that you’re going to do when it comes to a sizable amount of money that you can bring back into your estate. So most people in years past about this insurance policy that had no longer needed was just garbage I throw I throw it away and it was no big deal but now people are finding a lot of value in that not only the seller but the buyers and the investor here finding huge value in that. 

Buck: Right yeah all in all I think if you look at the statistics some of the reason why these French companies make money hand over fist is because in part I mean they don’t pay out very much right. I mean not that they won’t pay out on something that’s actually that they’re supposed to pay out but there’s a lot of people who just let these things expire I mean and and think some crazy statistic on that it’s something like sixty percent or something.

Tim: It’s really much higher than that even yeah. I mean if I could just say one thing there too 

Buck I think you’re will find interesting when you think about cuz people will say well gosh isn’t it’s going to like decimate the insurance industry well first of all it’s been around for thirty years and it hasn’t yet but right but the thing about it is the insurance industry it’s 17 trillion dollars this industry life settlements is about fifty billion dollars okay so that’s like three tenths of one percent of the total policies of course that are affected by life settlements and yes when bought right they are going to pay off and the insurance companies will pay but it’s not like it’s ten or twenty or thirty percent of the industry it’s a very very small cream off the top a little bit on the insurance company you’re still going to do just fine.

Buck: Yeah as I mentioned earlier this is a you know this is something that we’ve been working with ASR in investor club and if you’re interested in learning more there’s a video that I did I played a little bit dumb here just so we we could we could have Tim explain things to us but go to hedgetheeconomy.com and that’s exactly what this is that is a hedge to the economy so hedgetheeconomy.com and what you’ll see there is a little bit more detail on how a fund like this works. Is there anything else you’d like to say before we go?

Tim: We’ve covered a lot of ground. I will say most people on this call I’m sure know of you or know you because they’ve been watching you for quite some time and I know that you didn’t ask me to do this but I’ll put in a big prop for you because not only have you been very good with us for many years now but I know that you treat your clients like gold and that means it means a lot to us I mean we even know not dealing with the end consumer most of the time it means a lot we have an advisor like yourself who put so much effort and energy and time into the process and into your people you have a great team of people and that means a lot so if you’re thinking about doing anything with black weather that’s life settlements or real estate or whatever you’re in really good hands.

Buck: That’s very nice of you to say Tim and thanks for joining me and giving people all this insight on this pretty exciting asset class.

Tim: You’re welcome. My pleasure. Thank you.

Buck: We’ll be right back.