2010 Life Insurance Secondary Market – ‘Moving Forward’

Abstract:     
“Caution” has been the carryover by-word from 2009 for good reason. Some would like to think the Life Insurance Secondary Market (“LISM”) has faltered. However, the LISM is indeed “moving forward!” This should be welcome news to seniors, investors and many LISM players, but unfortunately not for all. The capital markets turmoil has taken its toll and changes are happening.

2009 marked the LISM’s first year of contraction after experiencing over fifteen years of steady expansion. The LISM will again expand. We expect that with this next wave of expansion, the LISM will become more sophisticated and create valuable investment structures. We expect the LISM will continue to demand higher standards, fairer laws, consumer protections and consumer notifications. Investors will return. The life insurance secondary market is here to stay and will continue to provide a valuable option to seniors who do not want or need their life insurance policies.

Sophisticated investors are attracted to the life insurance asset class because they have access to resources to help them comprehend and understand the risks and the benefits. Consumers and policymakers often do not have access to such resources. For the LISM to truly materialize as a vibrant asset class, more education is needed for consumers, policymakers and industry stakeholders. If the LISM provides consumers and policymakers with the research and knowledge necessary to develop informed opinions, it will gain strength and value. More research and education is needed.

This paper attempts to summarize many of the dynamics occurring in the LISM as 2010 unfolds and to give perspective to some of the changes and challenges that need to be managed. In addition, ISI has visited with a strong sampling of executives from leading LISM firms to solicit their views on issues that are paramount in their minds.

Number of Pages in PDF File: 9

Keywords: life insurance, life settlement, consumer, investment, LISM, asset, securitization

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