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Life Settlements:
As many investors are exploring new asset classes to enhance the return and risk objectives of their investment portfolios.
The secondary market for life insurance, or life settlements, has matured into a viable asset class that can offer non-correlated
and favorable risk return characteristics for the institutional investment portfolio.
A life settlement is basically the sale of a life insurance policy to a third party for a cash payment. Life settlements are seen
as an innovative financial tool for owners of insurance policies when the original need for insurance has changed. By giving the
consumer an alternative to surrendering a policy, the secondary market for life insurance has created a forum for consumers to
receive fair market value for their assets instead of the carrier imposed surrender value.
As the market has evolved, institutional capital has begun to purchase more of the life settlement asset. Bernstein Research1
estimates the market could grow to an estimated $160 billion over the next several years. The time to explore adding life
settlements to an institution's investment portfolio is now.
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