Life Settlement

A life settlement refers to the sale of a life insurance policy by the policyholder to a third party. Life settlements are a way that policyholders can access capital that would otherwise not be accessible. Say, for example, a retired person in their 70's has a life insurance policy with a $300,000 face value. There is a market made up of individuals and institutions that would be willing to purchase this policy for a portion of the face value. If the policy is sold, the policyholder would receive a lump sum payment that they would otherwise only have received upon their death. The new owner of the policy assumes ownership of the policy and responsibility for the premium payments. This new owner will then receive the $300,000 when the previous policyholder dies.

Brett Arends on Life Settlements

Wall Street Journal personal finance columnist Brett Arends wrote an excellent piece on life settlements from a consumer perspective. Arends discusses: The inefficiencies of the life settlement market. When a life settlement makes sense. What to watch out for as a potential seller of a life insurance policy. Rates of return (10-12%) for buyers and investors in the life settlement market. The top three considerations for sellers in the market. Source: Wall Street Journal Full Story
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A Flurry of Media Interest in the Potential of the Life Settlements Market

Recent coverage of the life settlements market by the New York Times appears to have ignited a small media frenzy. Several pieces from sources such as the Motley Fool and the Boston Globe seem to fall into one of two camps with respect to life settlements: The industry has massive potential and will serve as the new engine of growth for Wall Street in the absense of the mortgage backed security market. The budding industry is a ghoulish creation that will ultimately run afoul of regulators and...
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Life Settlement Industry Could Reach $500 Billion

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...
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Life Settlement Sales by Seniors Have Doubled in Two Years

Life settlement sales made by seniors have doubled over the past two years to $11.8 billion. The financial crisis appears to have had an impact on sales as seniors are likely looking at all of their assets for sources of funds and liquidity . Experts do caution, however, that there are other ways to realize the value of a life insurance policy that do not involve loss of life insurance coverage: "If you're thinking about selling your life insurance mostly because you're strapped for cash, there...
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Growth Seen in Life Settlement Market

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