Who buys the policies in the secondary market?

May 12, 2016
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The Department of Insurance licenses life settlement providers in each state. These life settlement providers are then able to purchase life insurance policies from the secondary insurance market. Included in the companies that purchase life settlements are names such as Wells Fargo and TransAmerica.

These life settlement providers sometimes purchase policies for institutional investors such as banks, corporations and other funding sources like mutual and pension funds.

When did this secondary insurance market begin?

Even though selling unneeded or unwanted policies on the secondary insurance market has been legal since 1911, this process was uncommon until the 1980’s. During the 1980’s, even more limitations existed than do today.

Grigsby versus Russell is the Supreme Court case that established what is now the life settlement industry. This 1911 case formally established life insurance policies as an asset that can be bought, sold, or transferred as any other asset. Since 1911, life insurance policies have had the same status as real estate and other assets.

Are life settlements regulated?

Absolutely. Life settlements require licensing from both the buyer and the seller of the policy. These individuals who purchase and sell these policies must maintain licensing in their respective states.

Further, more than forty-five states currently have consumer protection in the life settlement industry.

Do seniors know about the life settlement option?

Some do, and the word is spreading. Over the last decade, this industry has experienced tremendous growth. This growth is attributed to financial advisors, accountants and other financial experts explaining the benefit a life settlement may provide his or her client.

Further, several states require that these experts share the life settlement option with their senior clients. Other states have followed suit and are attempting to enact legislation that would require this as well.

These two changes have increased the use of life settlements for seniors across the country.

When is a life settlement a sound choice?

Before making any decisions that may affect your future finances, consult your financial advisor. Keep in mind that a life settlement is a viable option for seniors in some cases. These may include illness, death in the family, or financial hardship. Any senior who is experiencing these hardships should discuss the life settlement options with his or her advisor or estate planner.

If you would like to hear more about the life settlement process, contact us. We offer a complimentary evaluation of your policy

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