Securitization

The business of selling a life insurance policy when it is no longer needed is poised to become a very large industry--particularly as retirees seek to tap into all types of assets for sources of income . According to a recent New York Times article, the life settlement industry could grow to as much as $500 billion. While this figure represents a small portion of the $26 trillion in life insurance outstanding, securitization of life settlements could prove to be a meaningful source of growth...

The life settlement market is benefiting from the fallout of the financial crisis. The supply side of the settlement industry is affected by consumers who have suffered through the crisis. Many are looking to raise cash through the sale of assets such as life insurance policies. Wall Street is pumping the demand side of the securitization market as investors seek alternative assets that are not correlated to the broader equity and fixed income markets. Source: Reuters Full Story

A major player in the life settlement market has filed for Chapter 11 bankruptcy protection. On Monday, J.G. Wentworth and two of its affiliates filed for bankruptcy protection in a Delaware court. J.G. Wentworth had been very active in the life settlement market. The financial crisis has deeply impacted all securitization markets, and the life insurance market is no different. Life insurance policyholders who have already sold their life or annuity policies and received funds should be fine...