Why Life Insurance Sales and Life Settlements Have Increased

Why Life Insurance Sales and Life Settlements Have Increased

A growing number of Americans are purchasing life insurance, but many others are selling their coverage through life settlements, according to the Amrita Life Settlement Index.

A life settlement is often a more profitable approach to cashing out your policy than selling it back to your original lender. 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. Life settlement companies 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 a life settlement, 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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