Skip to main content

In the dynamic realm of investments, seniors are uncovering a distinctive path to enhance their financial well-being, while investors are identifying a compelling asset class—life settlements. This financial strategy involves the sale of a life insurance policy to a third party, providing seniors with a lump sum greater than the surrender value but less than the death benefit. At Abacus Life, we not only explore the mutual relationship between seniors seeking financial flexibility and investors eyeing diversified, low-risk opportunities but also stand ready to guide you through this journey.

The Roots of Life Settlements

The roots of life settlements delve into a landmark 1911 Supreme Court decision, Grigsby vs Russell. This ruling affirmed the right of policyholders to sell their life insurance policies to third parties, birthing the concept of life settlements. Over the years, this alternative asset class remained discreet, known primarily through private transactions.

A Turning Point: The AIDS Epidemic

The 1980s marked a turning point for life settlements, triggered by the AIDS epidemic. Shorter lifespans and expensive treatments gave rise to a secondary market for life insurance policies, known as “viatical settlements.” Investors seized the opportunity, acquiring policies from brokers. However, this period faced challenges due to inaccurate life expectancy estimates and the lack of governmental oversight.

Modernizing the Asset Class

By the 1990s, regulatory measures were implemented to address concerns, leading to the securitization of policy portfolios. This rejuvenated interest in the asset class, now recognized as “senior life settlements” or the “longevity-linked asset class.” Today, life settlement investment funds constitute a distinct asset class, contributing to the financial landscape’s diversity.

Current Landscape and Growth

Despite market fluctuations induced by the COVID-19 pandemic, the life settlement industry witnessed growth in 2022, driven by consumer demand for additional income sources and investor interest in alternative assets. With an estimated 10,000 baby boomers reaching retirement age daily, the supply of settled policies continues to expand.

Benefits and Risks of Life Settlement Investments

Investors are drawn to life settlements for several reasons:

Diversification: Life settlements operate independently of traditional markets and asset classes.

Predictable Returns: Investors know the exact returns upfront, offering financial clarity.

Potential for Attractive Returns: Life settlements present the potential for 10% or more annual fixed returns with relatively low risk.

Maturity Payout: Upon maturity, the payout comes from highly rated U.S. life insurance companies.

Flexibility in Funding: Both qualified and non-qualified funds can be used for investment, aiding in retirement income planning.

At Abacus Life, we understand that navigating the intricate world of life settlements requires expertise and personalized guidance. Our team stands ready to assist you, providing insights tailored to your unique situation. Whether you’re a senior exploring financial options or an investor seeking a diversified and reliable asset, Abacus Life is your trusted partner.

Call us at 1-800-561-4148 or visit our website for personalized insights and expert assistance. Because at Abacus Life, we don’t just offer life settlements; We are committed to serving you with the utmost confidentiality, transparency, and urgency you deserve.


Author Abacus

More posts by Abacus