Insurance Hedge Funds A Good Policy For Clients?

Hedge funds nicely wrapped up in an insurance policy are beginning to catch on, and they bring certain advantages to those who purchase them.

Hedge funds nicely wrapped up in an insurance policy are beginning to catch on, and they bring certain advantages to those who purchase them. According to HedgeWorld, these investment vehicles must comply with a variety of Internal Revenue Service regulations, but compliance brings tax savings. The process of putting together a portfolio for clients could be arduous. For starters, the hedge fund has to be created exclusively for this type of investment and must appear on an insurer’s platform. The next step is tougher: finding the most appropriate investments for the policyholder. That process, William Dreher of Compensation Strategies, which has a database of some 75 HFs exclusively for insurance companies, told HedgeWorld that in some cases it can take up to two years to complete the task, as the insurer may have to deal with a cautious client with a lot of questions and scenarios. Dreher says the insurer comes up with a list of funds and compares their performance with insurer-created hedge funds and those independent of the insurance company. In a HedgeWorld interview, Dreher noted that the tax savings help make insurance-made HF a better performer than the standalone funds. There is one unique side benefit to insurance HF investors, says HedgeWorld: No other hedge fund requires a medical exam first, one that could uncover a potential health problem.