8/18/2026 1:33 AM (PST)

An investment policy statement (IPS) is a written document that outlines an investor’s goals, risk tolerance, asset allocation preferences, liquidity needs, and overall investment strategy. It provides a framework for making investment decisions consistently rather than reacting to short-term market movements. For investors considering alternatives such as life settlements, an investment policy statement can help define where an alternative asset fits within the broader portfolio. It may specify the amount of capital allocated to alternatives, the expected investment horizon, acceptable liquidity constraints, and diversification objectives. For example, an investor may use an IPS to establish that a portion of the portfolio can be allocated to alternative assets that have different return drivers from traditional stocks and bonds. The value of an IPS is that it creates a disciplined framework. Instead of evaluating every opportunity independently, investors can ask whether a potential investment fits the objectives and constraints already established in the policy. For sophisticated investors, including family offices and accredited investors, this can be especially useful when evaluating less liquid investments such as life settlements.