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Show Summary
In this episode of the Investor Fuel Podcast, host Michelle Kesil interviews Ariel Abbistar, a key player in the life settlement provider space. Ariel explains the concept of life settlements, where individuals sell their life insurance policies for cash, particularly benefiting seniors who may no longer need or afford their policies. The conversation delves into how this investment opportunity offers uncorrelated assets for investors, the challenges of educating the public about life settlements, and Ariel’s vision for making this investment accessible to a broader audience. The episode emphasizes the importance of understanding this niche market and the potential benefits for both sellers and investors.
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Investor Fuel Show Transcript:
Ariel I Abbistar (00:00)
Right, so usually a lot of the speed bumps, I would call them, that the investors focus on is that they’re uncertain, they’re not sure if, this the right investment? Should we go with this? Should we not go with this? And what I tell everybody, and I’m gonna tell you now, is that if you’re not looking for something that diversifies your portfolio, if you’re not looking for something that’s uncorrelated, I don’t wanna offer this to you. I wanna offer it to people who are, number one, able to afford it.Number two, it’s something that’s very niche, select few of group of people that are interested in this.
Michelle Kesil (02:07)
everybody, welcome to the Investor Fuel Podcast. I’m your host, Michelle Kesil. Today I’m joined by someone that I’m looking forward to connecting with, Ariel Abbistar, who’s been making serious moves in the life settlement provider space. So yeah, excited to have you here today, Ariel.Ariel I Abbistar (02:26)
Thank you, Michelle. I appreciate you guys having us on here. Excited for the conversation.Michelle Kesil (02:29)
Yeah, of course.Yeah, I think that our listeners are really going to take something away from how you’re supporting people in a industry that’s, you know, not so commonly known, but super helpful for people. So let’s dive in. Just first off, for those who are not familiar with you and your business, can you give the short version of what your main focus is?
Ariel I Abbistar (02:55)
Sure. So a life settlement is something where someone sells their life insurance policy in exchange for an upfront payment. So whether it be someone that can’t afford or no longer wants to keep their life insurance policy, we offer an option for individuals to sell their life insurance policy while they’re still alive.Michelle Kesil (03:12)
Awesome. So is this something that is for everyone or like what kind of people does this settlement target?Ariel I Abbistar (03:21)
Right. So there’s kind of two sides of the spectrum here. On one end we have the individuals, typically they’re usually seniors above the age of 65, where we’re able to provide this option to actually purchase the policy from them. Now, this policy is being purchased for numerous amount of reasons, whether it be somebody doesn’t want it, somebody can’t afford the monthly premiums on it, or they just simply don’t want it anymore. So what we’re able to do, like I mentioned, is we’re able to provide this option of a cash upfront payment.in exchange for the rights to their policy. So whether it be somebody that can’t afford medical expenses or people just like to enjoy their retirement, they can go ahead and they can cash out, they receive the cash today, and they’re able to go and use that funds as they please.
Michelle Kesil (04:04)
Amazing. So how does this support investors specifically?Ariel I Abbistar (04:09)
Right, so for the investor side of things is it provides a strong uncorrelated asset that essentially doesn’t involve anything. Whether it be the political views of someone or it could be something that’s going on in the world, this asset class is something that is untouched. So for example, if we go into real estate, we know that recently the rates go up and down, we have the market swings. It doesn’t happen like this in the life settlement space.If you buy a $1 million policy, it’s a $1 million policy up until maturity. And when that time comes for the maturity, that’s when the investor gets paid out.
Michelle Kesil (05:34)
Okay, can you expand more on that, like how that process works?Ariel I Abbistar (05:39)
For sure, for sure. So a lot of people have so many questions because believe it or not, a lot of people have heard about the industry. They just heard about it. They’ve never gotten a step into it. They never looked up a video. What is it? How does it work? So that’s what we do here at Abbey Store. When you get on a call with us, when you meet with us, we’re able to explain in full depth how we do it. One way what we do is we offer this investment avenue as an asset class to the investors. So when an investor comes up, let’s put it into perspective.When somebody wants to come purchase a policy, we go through all the paperwork that’s necessary upfront, then they go ahead and they push the payment into an escrow account where they’re able to see what type of policies they’re able to afford in their budget, what’s their price range, what are they looking for in that policy. There’s numerous amount of things, whether it be a life expectancy or just the medical condition of that in short. So there’s a lot of different key components that go into it.
But once you’re able to settle on a policy, right? So you pick a nice policy that you have confidence in, that you really like. You’re continuously paying these premiums until the day of the maturity of that policy. So whether it be five years, whether it be three years, whether it be 10 years, again, it all depends on the investment appetite of that personal individual. Now, with Abbistar being a provider, that there is less than 50 of us in the US, across the whole nation, we’re able to custom tailor these investment opportunities.
towards that specific individual. So if somebody wants to invest $10 million, for example, we wouldn’t put them into one policy. Our advice would be, purchase a couple different ones and have the ones that one out of five, for example, mature, you’re able to use the proceeds from that first one to pay off the rest of the investment.
Michelle Kesil (07:17)
Okay, wow, that’s very fascinating. So what got you started in this space?Ariel I Abbistar (07:24)
Right, so what really inspired me to not only join the company but get into this life settlement industry is that I’ve seen so many seniors in my days that they just don’t know what to do when it comes to bills and payments. And you know, at the end of the day, what do you really work for? You know, they’ve been working for 30, 40 plus years sometimes. And at the end of the day, they’re hit with a bill that they can’t afford when they’re 70, 80 years old.for me that just hit a soft spot. So I said, you know what, there has to be a solution for individuals, specifically seniors and elderly to help themselves in their own situation. Now, if they were to go, the insurance gives you an option, whether it be a cash out value, a cash surrender value, or just surrender the policy as a whole. Usually, it’s such a small amount that it lessens the value of the policy. So if you have a million dollar policy,
it’s no longer a million dollar policy, it’s right after that it’s much, much lower. So it really depends on what it is exactly and again, it goes up to the seniors. If the seniors are not able to afford it, we’re giving them an option to get out of it. So that’s what inspired me to get into the industry.
Michelle Kesil (08:30)
Yeah, absolutely. That’s so important. So what has been like the key to keeping this business running smoothly?Ariel I Abbistar (08:37)
Right, so one of the key things I like to always point out is that this industry didn’t start last year, didn’t start the year before, it started all the way back in 1911. When Congress approved a life insurance policy to be an asset class, no different than the house you own, no different than the car you drive, it’s an asset that can be bought and sold. So whether you want to sell it, whether you want to buy a policy, it’s an asset. Okay, at the end of the day, we have 90 % of the population that don’t know about this industry.So one of the struggles that we face is just solely not even getting clients, just educating people about this industry, whether it be the seniors, whether it be the investors. We have investors saying, hey, we hate getting hit with these market fluctuations and we hate having Elon Musk when he sends out a tweet that he has to determine how much I’m going to make that day. People don’t like that. So what we offer is an uncorrelated, non-market volatile investment that anybody’s able to essentially reap the benefits from.
So of course we have an underwriting process that goes through it and what makes us really different and stand out is that we have a very strict, I wouldn’t call it a formula, but we have a very strict step-by-step process when we purchase these policies as an investment. So we get sent on a bi-weekly basis about 20 to 30,000 policies and we’ll maybe possibly buy one. Maybe it’s a very small chance that we’ll even purchase one. So again, we do a lot of the homework for you, but of course everybody needs to be educated. So we put together all the educational material you need.
whether it be a sit down face to face on a one-on-one meeting or on a Zoom call like we’re doing now over wherever we are, we’re able to talk and educate each other about what we do. Now, we love to, like I said, we love to educate the people, but at the same time, we like to keep their options open. We don’t want to make sure if you can’t pay these premiums or if you can’t uphold the investment, should say, we wouldn’t recommend you get into it.
we would recommend you can get into a smaller one. We have different options that we’re able to custom tailor, but we always do the best thing for the investor.
Michelle Kesil (11:08)
Amazing. Yeah. So what are like some of the common questions that your clients come in with that maybe are there wanting to learn more about your business and how it can support them?Ariel I Abbistar (11:23)
Right. So just to the first off, everybody always asks, is this legal? And the simple answer is yes. And I mean, you can’t get simpler, much more simpler than that, but it is illegal. We are licensed providers in the states that we operate in and every state has their own regulations. So it’s a little bit different than federal regulations where federal regulation is essentially we’re giving you a law and everybody within this federal country has to follow. A state regulation isSome states are stricter, some states are more lenient, so it really depends. It’s better for us to have a stricter state so that the investor themselves feels comfortable that, listen, they’re operating on the right guidelines, they’re following the correct steps that are needed. And we do all the proper forms, everything that needs to be filled out, we help in that process. So we’re not just letting the investor, hey, go fill out these forms, go figure it out. We’re here to walk you through step-by-step the process, whether it be from starting the purchase.
all the way up until the policy maturity. We also offer a third party service to do the servicing of these policies. So after sales, once the policy is purchased, once you’re already in the first second year, there’s something that we do, it’s a service maintenance where you make sure the premiums are paid, you make sure there’s nothing outstanding from the insurance carriers. So we have somebody, dedicated specialist in our team that are on top of your cases essentially.
Michelle Kesil (12:43)
Amazing. Yeah, that’s so important to walk people through each step of that process. So if an investor is looking to diversify and is thinking about your services, what are some of the hesitations they might have that you have helped people overcome and see the value in your service?Ariel I Abbistar (12:48)
Right. 100%.I agree.
Right, so usually a lot of the speed bumps, I would call them, that the investors focus on is that they’re uncertain, they’re not sure if, this the right investment? Should we go with this? Should we not go with this? And what I tell everybody, and I’m gonna tell you now, is that if you’re not looking for something that diversifies your portfolio, if you’re not looking for something that’s uncorrelated, I don’t wanna offer this to you. I wanna offer it to people who are, number one, able to afford it.
Number two, it’s something that’s very niche, select few of group of people that are interested in this.
Some people think it’s a morbid industry. I think on the contrary that we’re helping people because at the end of the day, these people, they have an asset class that they have an asset that they want to sell and we provide that option to sell it. people, specifically investors, they really struggle with knowing is this the right path for us? And what I always say is,
Listen, this is besides the real estate you have, this is besides the businesses you have, this is besides all the other alternatives that you have in your portfolio. So this is just something else to help you diversify, to help you secure your future because you won’t know what’s going to happen within a couple of years from now. So we always say, secure your future.
Michelle Kesil (14:59)
Yeah, absolutely. That future goal is so important. So what are some goals that you personally have for where your business is heading?Ariel I Abbistar (15:08)
So what ABASTAR is doing that I think is amazing and I love every day that I come here because I know it’s a great thing to be a part of essentially. One of the things that I want, I foresee in the future of ABASTAR is it being an alternative investment that’s really in everybody’s portfolio, whether it be the average, you know, our rescue help workers, whether it be the fire department, you know, anybody in the police force, anybody.we would like to have everybody invested into this. Why? Because it’s such an asset that again, it’s not affected by the market. It’s not affected by what’s going on around you. Let’s say somebody, lot of our clients, they have children. So what they do is they go ahead when this kid is five, 10, 12 years old, they go ahead and they buy them and life insurance policy, not on them, but they buy on behalf of them. So that whenever that time does come when that child wants to go to college, wants to go to university,
They’re able to use the proceeds from those policies in order to fund that college experience. Or again, you’re funding their future at the end of the day, whether it be college or a trade that they want to go into. It’s something that only benefits in the future.
Michelle Kesil (16:14)
Yeah, absolutely. Is there anyone that wouldn’t benefit from this?Ariel I Abbistar (16:19)
It’s hard to think of it because how I see it, it’s a win-win situation. Whether it be the insured or the investor. The insured gets more money than they would have thought they would have ever had. And the investor gets an uncorrelated asset, something that they’ve never known about before most of the time. And they get a strong investment because it does provide the returns are there.And yeah, it’s really hard to say where the downsides are. Really is.
Michelle Kesil (16:45)
Yeah, absolutely. what are like, are there any states that you don’t offer this service in or it’s available for everyone?Ariel I Abbistar (16:53)
Right, so that’s a great question. We do offer our services in all states, but then again we do have certain restrictions, some regulations, depending on, you know, let’s say Hawaii for example. Hawaii, there’s not too many transactions going on there, so we typically try not to operate there. Same goes with Alaska, Puerto Rico, where there are not so many.Michelle Kesil (17:12)
Yeah, that makes sense. what is like your, like where, what are you like most focused on solving or scaling right now when it comes to this business?Ariel I Abbistar (17:24)
So right now in ABBA Star, my number one goal every day I come in, my goal is to just educate, educate, educate, educate. Because like I said, 90 % of the population, whether it be an insured or an investor, they do not know about this. They don’t know about this. So it’s something that I take a personal responsibility to do is inform anybody I can. Because you never know when you’ll be able to need this. You could be, let’s say, 40, 50 years old now andlooking to sell your policy within the next 20, 30 years. So it’s an option that you just, you you don’t gotta know about it, you don’t have to boast about it, but you just have it in the back of your head and you think about it as, you know, as time goes on.
Michelle Kesil (18:02)
Right. So when someone purchases this policy, like how can they then utilize like the investment, like kind of cash out, like how does that process work?Ariel I Abbistar (18:14)
Right. So it’s in the formula and what I always say is you purchase a policy, you pay the premiums, once the policy matures you get paid out. So there’s no real number to know when somebody will pass. We have something what’s called a life expectancy or an LE for short. A life expectancy is when you send all the medical records for usually the past 25 years of that individual to an actuary. An actuary are scientists that sit there and they figure out based on science datawhat will happen with this individual. For example, if they have a heart condition, sometimes when it’s serious, they’ll look in to say, hey, majority of the people in the US that have this heart condition with this specific demographic of individual, whether it be a male or female, because at the end of the day, believe it or not, usually the females do live longer than the males. So that also comes into consideration. Again, we are able to use these actuary reports.
They say, hey, that person with a heart condition will most likely pass earlier than someone without a heart condition or somebody with a less severe condition. So what we would do is we would assess that and that would go into our underwriting. And at the end of the day, it all affects the price. It all affects the market, so to say. If somebody has very little ailments, they won’t get the…
they won’t be able to get these type of investors that are looking to actively purchase their policies. So if somebody, you know, do we have investors that purchase policies on a bi-monthly basis? So every two, three months they say, hey, what policies you got? What policies you got? And again, it’s just at the end of the day, comes down to the market. It’s not that it fluctuates, it’s just that, you know, people are looking to sell their policies every day. And every single case, it’s like a diamond because…
Never, never is there a case that’s the same as the one previously. Every case is different and what we always say is reach out. Our goal is just to engage that conversation, whether it be a phone call, whether it be an email, just reach out, have that conversation. If you’re looking to sell or if you’re looking to invest, again, just that initial conversation is something that’s more than sufficient to educate yourself and from that conversation you’ll be able to know which path you want to take.
Michelle Kesil (20:21)
Yeah, absolutely. That’s so valuable. Love that. So before we wrap up here, if someone wants to reach out, connect, collaborate, and learn more, where can people find you?Ariel I Abbistar (20:32)
Sure, so you can visit our websites, we have multiple websites. If you’re looking to learn more about the industry, can go to abbistar.com, and that’s A-B-B-I-S-T-A-R.com. And then if you’re looking to sell your policy, you can come over to abbistarlife.com. So that’s abbistarlife, all one word, dot com. And if you’re ever looking to invest into a policy or to explore alternative assets, alternative investments, it’s investabbistar.com.If you’re ever looking to call us, it’s 877-222-4782.
Michelle Kesil (21:04)
Well, listen, I appreciate your time, story, your perspective. Thank you for being here.Ariel I Abbistar (21:09)
100 % I appreciate you Michelle. Thank you so much guys. It’s an opportunity. Thank you.Michelle Kesil (21:12)
Absolutely. And for the listenerstuning in, if you got value from this, make sure that you’ve subscribed. We have more conversations with operators just like Ariel, who are building real businesses. And we’ll see you all on our next episode.
