The Secondary Market Explained

Policy holders through Life settlements have an opportunity to generate returns that can be three to four times cash surrender value. The cash payments they receive enable them to abandon existing policies and make decisions that would otherwise not be open to them. In other words, if they qualify, those wishing to cash in their policies can now get a competitive market quote based on several bids – creating superior outcomes for the policy seller.

Brokers, who represent the policy sellers, solicit multiple bids from life settlement providers. When the policy owner accepts a bid and the transaction is completed, policy ownership is transferred to the life settlement provider (typically a licensed entity) – who assumes premium payments.

Life settlement providers competitively bid on the purchase of an existing policy, taking into account the insured’s current age, state of health, and the overall economic environment.

Investors and institutional investors provide the Life settlements providers their funding sources. The appeal of no market risk, return of principle along with the double digit absolute return on investment is supercharging the development of the life settlement industry

Market Explained