US-Life Settlement Market

US-Life Settlement Market


US-Life Settlements are existing life insurance policies in the United States, which are for sale on the secondary market at a price below the sum insured. The policy-holders are seniors between 65 and 95 years of age. The policy-holder sells the policy to the buyer, the new beneficiary. After the seller has passed away, the return from the amount insured will be payable by the insurance company to the new beneficiary (buyer).

In 2013 the second hand policy market had a volume on sold policies in the amount of 24 billion dollars, this market has a capability of 160 billion dollars.

The market for US-Life Settlements is an independent market without correlation to other markets such as stock markets, real estate markets, commodities markets.

The second hand policy market gives liquidity to the old policy-holder and offers a unique investment opportunity to the investor looking for a secure investment with high return. Each policy is based on two independent medical expertises issued by two recognised medical centres fixing the life expectancy. The medical firms such as AVS, 21 Services, Midwest or Fasano are certified by Lloyd’s London. The life expectancy (LE) has a duration from 2 to 8 years. In nearby 80 % of the deceases the seller is passing away before the estimated LE. Result: If the senior and seller of the policy will pass away before his LE, the profit p.a. will increase. If he will pass away after his LE the profit p.a. will be less.

The US-fiduciary appointed as trustee and escrow agent will control and monitor the procedure, check all documents needed for such an investment protecting the rights and ensuring the duties on the seller’s side and on the buyer’s side. The investment in US-Life Settlements is a very secure and attractive investment, combined with very low volatility and extraordinary return expressed in double-digit numbers.

The life settlements market gained popularity in the alternative investment industry when there was deterioration in the credit markets and due to the significant acquisitions made by Warren Buffet and Bill Gates. Moreover, a non-negligible correlation between most asset classes was observed. The life settlements asset class is popular amongst institutional investors including hedge funds, insurance companies, asset managers, pension funds, family offices and banks. It is considered as non-correlated with other markets and offers annual return rates above 10% depending on the structure. 

Past experience confirms the actuarial assumption that there is no correlation between mortality rates and capital markets. This non-correlation between mortality and financial markets guarantees a certain stability in returns, no matter how financial markets evolve, including equivalent investments in equity, bonds, commodities or property. The main advantage of life settlements is the absence of correlation to other markets.