In 1911, the U.S. Supreme Court decided that life insurance policies are freely assignable for value. The court found that a life insurance policy is a form of property and that policy owners are free to sell and transfer ownership to other parties.
After World War II, the American economy and the insurance industry boomed. New forms of policies, such as universal life, became popular. Life insurance policies became a familiar consumer product – often purchased outright or incorporated into a corporate benefits package.
It wasn’t until the 1990s that a market for viatical settlements arose. Such settlements became a popular option for terminally or chronically ill policy owners who wanted to sell their policies to third-party investors. These policy owners often had HIV and needed the money for costly medication and treatment.
In the late 1990s, life settlements emerged from the viatical industry. Since then, the value and the volume of the life settlement industry have increased dramatically.