10/7/2026 12:40 AM (PST)

Policy Sourcing and Due Diligence are important because the quality and characteristics of the underlying life insurance policies can have a significant impact on an investment's potential economics. The sourcing process involves identifying policies that meet defined investment criteria. Due diligence may then involve reviewing the policy type, face value, ownership information, premium history, policy status, insured's age and health information, and other relevant documentation. Life expectancy analysis is another important component. Independent actuarial assessments can help estimate a potential holding period, but actual longevity can differ from projections. If an insured lives longer than expected, additional premiums may be required. Financial analysis should also examine the relationship between the acquisition price, expected death benefit, premium obligations, fees, and projected cash flows. Strong Policy Sourcing and Due Diligence processes can help investors better understand what they are acquiring and the assumptions underlying an investment opportunity. However, thorough due diligence cannot eliminate the risks associated with longevity, liquidity, policy performance, or other investment factors.