Investments of the Secondary Marketplace in Life Settlements

Investments of the Secondary Marketplace in Life Settlements

Lots of money is being poured into the investments of the secondary marketplace in life settlements. The numbers spiked almost 100 points in one month to retake losses from multiple months prior, per Amrita.

A growing number of Americans are being offered money to sell or pursuing buyers directly themselves to unload an unwanted life insurance policy they no longer need, according to the Amrita Life Settlement Index.

Rather than let it lapse, savvy policyowners are transacting a settlement for a third party to become the beneficiary of the policy. So when the policyowner passes away, the investor realizes the payoff.

Life settlements are a more profitable approach to cashing out your policy or letting it simply lapse. Many investors who buy these policies are actually insurance agents. They receive substantial financial benefits when the policyholder dies.

Amrita’s monthly index showed a 92.8-point climb in April 2010, bringing its levels from 324.6 to 417.4. This 28.6 percent increase reversed the losses reported during the previous two months. Companies who conduct life settlements point to market activity for this change.

“Provider surveys pointed to increased competition among buyers for life insurance policies,” the report says. “Furthermore, respondents showed a bullish outlook for the life settlement market going forward.”

In addition to seeking life settlements, consumers who are no longer able to keep current on life insurance premiums may allow their coverage to lapse, cash out with their insurance provider or turn to a non-forfeiture option, according to the Insurance Information Institute. The last option allows policyholders to keep coverage in exchange for certain benefits.

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