The Secondary Market Explained

Initially – a senior individual has a life insurance policy and for one or more reasons it no longer meets the initial need as intended when it was first bought. In this situation, the insured has the choice of surrendering the policy back to the insurance company if there is any cash value, for pennies on the dollar or just stops paying the premiums and let the policy lapse.

Neither of these two scenarios are very positive; therefore the insured can elect to sell the the policy for profit, even though at a discount, to a buyer on the secondary market.

An interesting fact is that historically 89% of all life policies never result in a death benefit claim because they are lapsed, surrendered or replaced.

Once a policy has been sold to a buyer at a deep discount from the full face amount, it can then be resold pro-rata to individuals. This is known as Life Settlements. Client-participants in this program share the beneficiary proceeds of the life insurance policy.

As a participant, upon maturity of the policy due to the death of the insured, you receive a pro-rata distribution of the death benefit. The specific amount you receive at maturity is determined by the percent of your participation in the policy.

Here's the bottom-line: When an insured passes away, clients are re-paid their original participation amount plus income, which we call their "base-line expected income." The total income could be higher if there are any unused premiums to be refunded.

All transactions, including the initial purchase and the subsequent payments at maturity, are facilitated by a well established third party Escrow Agent. The Escrow Agent independently manages all monies used for your participation.