The Emerging Alternative Investment – Life Insurance Assets

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.

All credits of this paper belongs to Professor Edward S. Adams, J.D., M.B.A., Howard E. Buhse Professor of Finance and Law, University of Minnesota Law School and Financial support for this Paper was provided by Insurance Studies Institute.