The Asset Class
The life settlements market
The secondary market in US life insurance policies, also known as life settlements, offers investors the opportunity to purchase life insurance policies at a discount to face value.
To sellers of life insurance polices the secondary market offers an attractive alternative. Traditionally, policy owners received little, if any, economic value from policies they no longer wanted. In fact, even today, the majority of life insurance policies simply lapse with the beneficiary not being aware that his/her life insurance policy could be sold in the secondary market for an attractive value. As a result, the value of life insurance policies that lapse every year is substantial. According to the Life Insurance Settlement Association (LISA) www.lisa.org the secondary market offers a win-win situation for both consumers and investors.
A report released in 2019 by Conning, predicts that by 2028, the market will have seen an impressive $212 billion of life settlements, while on an issuance basis the average volume of its ten-year forecast for new life settlements is approximately $6.4 billion annually.