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.

Notes from the CFA Institute Fixed Income Conference

The CFA Institute just held its 2012 fixed income conference in San Francisco.

Speakers shared a very broad range of perspectives on fixed income issues over the course of about a dozen sessions.

Session notes and observations (in no particular order) include:

Demographics and Deleveraging -- Rick Rieder, Blackrock

The Best Idea in Light of Demographic and Fiscal Challenges -- Scott Simon, PIMCO


Glenn Daily on Buying Annuities and Why it Might Make Sense to Wait

Glenn Daily is one of the top financial advisors in the country. 

Specializing in life insurance and annuities, Glenn is widely...


New Longevity Hedge Fund Launched

The former founders of the life settlement desk at Goldman Sachs have recently launched a longevity -based hedge fund that will invest in life settlements. The name of the New York-based firm is Broad River Asset Management. The founders are currently seeking to raise initial capital . Source: HFMWeek

Investing in Longevity Risk

Longevity risk has existed as an asset class for quite some time but has primarily been the focus of larger institutions. In a recent Financial Times article, the author discusses the recent proliferation of longevity and mortality related investment products. The range of product options include: Life settlements, blocks of annuities, reverse mortgages and life tenancies. Longevity/Mortality swaps. Structured notes, including pass-through, principal protected notes, coupon protected notes and...

Life Settlement Market Shrinks in 2008

Similar to many parts of the economy, the market for life settlements took a step back in 2008 as a result of the financial crisis. The face value of life insurance policies that were exchanged through life settlement transactions in 2008 was $11.8 billion, a slight decrease from $12.2 billion in 2007. "Tighter" capital market conditions contributed to the recent advantage that buyers have had over sellers. Analysts believe that the general advantage will return to sellers as liquidity and...
Key Phrases: