FAQs for Individuals

Is this an active market? Have a lot of seniors entered into these types of transactions?

Yes, the life settlement market is a thriving and growing market. The life settlement market has the potential to grow from approximately $87 billion in 2011 to $151 billion in 2020 in face amount of policies settled, according to a recent report by Conning Research & Consult-ing, Inc. Back in 2007, Conning Research reported the life settlements market as a growing $12 billion industry.

Third Party Confirmation
Conning Research & Consulting has been working with insurers for more than 50 years. They offer many insurance industry research and information services. Conning Research & Consulting is a leading global third-party insurance asset manager with offices in Hartford, New York, London and Dublin.

What is the benefit to policy holders to do a life settlement vs. cashing in the policy with the insurance company?

A recent government report indicated that sellers of secondary insurance policies get an average 7 times more than the cash value from the insurance company.

Third Party Confirmation
U.S. Government and Accountability Office (GAO), study released 7/22/10.

Are there a large percentage of people that will not benefit from their current life insurance policy?

Yes, whether the insured lets the policy lapse or gets the cash surrender value from the insurance company, 85% of universal policies and over 95% or term policies will NOT end up in a death benefit being paid to the insured.

Third Party Confirmation
Website “The Complete Lawyer”

It is legal for someone to sell their life insurance policy?

Yes. The legal basis for the secondary market in life insurance started in 1911 with the U.S. Supreme Court case of Grigsby v. Russell (pg. 3). With this case it was shown that life insurance had all the legal qualities of property which meant that life insurance could also be transferred in similar manners. Grigsby v. Russell set the rights that a policy owner could name the beneficiary, borrow against it, sell the policy and change the beneficiary.

Third Party Confirmation
U.S. Supreme Court Case of Grigsby v. Russell

What are the benefits of using life settlements as part of a charitable gifting program?

Donor Benefits:

  1. Making a donation to his/her favorite philanthropic organization without depleting cash reserves or losing income-producing assets.
  2. Getting a tax deduction for the fair market value (selling price) of the life insurance instead of only cash surrender value.
  3. Being able to see their donation put to use during their lifetime, rather than after their death if the organization did not utilize a life settlement.
  4. Eliminating the requirement of continued premium payment on the policy.
  5. Removing a taxable asset from their estate if the policy was individually held.

Organization Benefits:

  1. Revive a donation from a donor who may not have otherwise been in a position to contribute.
  2. Collect a lump sum of cash today for capital projects, instead of having to wait for the insured’s death to collect the proceeds.
  3. Not having the financial burden of paying premium payments to keep the policy in force.
  4. Providing a valuable option to the donor that furthers their tax and estate planning objective and invites the opportunity for future/additional gifts.
  5. Accommodate an owner who wishes to see the policy’s hidden value tapped while he/she is still living.
  6. Develop stronger relationships with donors through more creative planned giving programs.
  7. Improve annual budget forecasting ability.