• The proceeds from the policy sales are often many times greater than the cash surrender value that would otherwise be offered by the insurance company.
  • The single most common reason for seeking a life settlement – representing 40% of all such transactions – is tied to the desire to obtain a different policy on more attractive terms.
  • In 2007 alone, life settlements provided seniors with $854 million in excess of cash surrender value.
  • 88% of all universal life policies never result in a death claim
  • A study published by Conning and Company, an insurance investment and research firm, found that more than 20% of the policies on insureds age 65 and over have a fair market value in excess of their cash surrender value.
  • Grigsby v. Russell, 222 U.S. 149, 156 (1911). Justice Oliver Wendell Holmes’s unanimous opinion of the Supreme Court in that case is notable for his statement that “[t]o deny the right to sell [a policy] . . . is to diminish appreciably the value of the contract in the owner’s hands.” Ibid.
  • Lapse rates for life insurance policies are remarkably high. According to a 2005 joint study sponsored by the Society of Actuaries and LIMRA International, nearly 40% of all individual life insurance policies lapse in the first 5 years. Another report in 2004 by a leading actuarial consulting firm found that, using recent industry levels of mortality and lapse experience, nearly 88% of universal life insurance policies and over 85% of term policies issued in the United States never result in a death claim. For policies issued to seniors at age 65, the corresponding percentages are 76% and 74%, respectively.
  • Viatical settlements are transactions similar to life settlements, but are intended for insureds who are chronically or terminally ill and have a life expectancy of generally less than 24 months. An additional 12 states regulate viatical settlements only. Since 2001, 13 states have enacted legislation regulating life settlements. As of the date of this publication, 14 states are considering legislation or regulations relating to life settlements.
  • According to the 2007 Life Insurers Fact Book, compiled by the American Council of Life Insurers, there was $10 trillion of individual life insurance in force on 160.5 million policies at the end of 2006. When individual life insurance is combined with group and credit life insurance, there was $19.1 trillion of life insurance in force on 374.5 million policies at the end of 2006.