The life settlements industry has been a viable secondary market for life insurance for over 100 years. However, it took until the 1980’s to really catch hold as a reliable way to earn value from an unwanted policy. Since then, the industry has blossomed, more regulation has come into play, and new avenues have appeared to help clients to get the most out of their policy. As you move through the timeline below, we will note some key events in the life settlement history that have made the industry into the giant that it is today.
The U.S. Supreme Court case of Grigsby v. Russell defined a life insurance policy as an asset, which may be assigned at the will of the owner. This decision opened the door for the life settlements industry to come.
The outbreak of the AIDs epidemic left many young people scrambling for current dollars to pay for treatment in an attempt to prolong their life. This environment fostered a huge market for viatical settlements.
Financial investors recognize the benefits that life settlements could bring to Americans over the age of 65. Seniors now begin to sell their unwanted or unneeded life insurance policies in a desire to obtain a greater payout than their cash surrender value.
The U.S. Supreme Court refused to hear the case SEC v. Life Partners. This meant that regulation of life settlements and the insurance industry would remain in the hands of the states and would not become federal policy.
The financial crisis causes the funds that providers use to purchase policies to decrease. As a result, a majority of seniors owned a life insurance policy, but almost half of them were unaware that their policy could be sold for cash. Furthermore, those who were trying to sell their policies were often unable to due to the lack of funding in the industry.
The life settlement industry saw a resurgence as institutional investors returned and funds began to flow back into the market. Regulation increases as well, as more states begin to institute laws regarding life settlements and other insurance-based transactions.
The industry has significantly improved since the 2009 – 2010 market fall and is actually on the upswing. The need for life settlements continues to flourish as more people realize that their policy is worth more than the cash surrender price.
The life settlement industry continues to evolve and change as institutional investors, providers, and financial agents gain a greater understanding of the interworkings of the transaction. A life settlement has many layers and can occasionally be complex.
In order to help our clients receive the greatest possible benefit from their life settlement, we at Abacus know that we must continue to educate ourselves about any changes that take place in the industry. Therefore, we make it our duty to always stay up-to-date on all new information. We are dedicated to always adhering to industry standards and keeping our entire operation completely above board.