Despite the economic challenges that many industries have faced in recent years, the life settlement market prevailed. This niche market has established itself in a position to face economic strains with grace, finding innovative ways to remain successful.
The Deal, a life settlement news outlet, just released their 2021 review noting that in order to work through the rough economic backdrop, settlement companies got creative in their business models and strategized accordingly. By going back to the basics and focusing on foundational concepts like valuation, education, and communication, thriving companies like Abacus Life remained successful, even through the challenging economic landscape. Abacus Life paid out an average of 22.5% per dollar of policy face value, or $220,500 per million dollars—a whopping 35% more than the remaining top 5 providers. For 2 years in a row, Abacus Life topped the charts in amount paid out to policy sellers.
The Life Insurance Settlement Association‘s third-party vendor developed a new data point in this year’s release showing that sellers received $660 million more last year than if they lapsed their policies or surrendered them back to insurance companies.
The Deal’s Life Settlement Report also noted that there continues to be a lot of demand for life settlements, despite outside economic factors. Settlements are a unique financial avenue because they provide cash lump-sums to seniors with personally owned policies to fund medical expenses, supplement their retirement, halt expensive premium payments, or fund whatever else they may need. Likewise, for business owned policies, should a key man policy no longer be needed, the company could sell the policy for a settlement at significantly higher than the policy’s cash surrender value. Essentially, the need for a settlement is likely to remain strong through whatever the economy may bring.
Source: The Deal