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The average face value of life insurance policies is approximately $225,000, says the Life Settlement Insurance Settlement Association. (Photo: Shutterstock)

The life settlement market continued to grow in 2019, and all indications are that this trend will continue.

Life settlements involve life insurance policyowners selling their policies to secondary buyers.  Settlement purchasers are mostly financial institutions and hedge funds, but additional buyers have emerged in this industry.

Not only are blocks of life settlement policies attractive to institutional buyers, but they have also become popular as an alternative investment, so there is a flurry of capital available to purchase eligible policies. Buyers are purchasing policies today at lower anticipated ROI’s than ever before. According to the Life Insurance Settlement Association, more than 250,000 policies with a combined face amount of over $57 billion is lapsed annually by U.S. seniors over age 65, and these are just the permanent plans. If term life is added, the total exceeds $112 billion. This is a very timely topic and one that others will be having with your clients if you don’t address this with them.

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