The life settlement industry can be a difficult one to understand. As a policyholder or potential investor, it is important to know the market before deciding to sell or invest in a policy. Since life settlements have become a legal and enforceable investment, the market and industry have grown at a significant rate. Therefore, we have provided a summary of what to expect when selling a life insurance policy or investing in a settlement.
The average policy value in life settlements is approximately $1.2 million, meaning the life insurance policyholder would receive this much by selling their policy to a life settlement provider. On average, the projected life settlement payout is around four times the cash surrender value of a life insurance policy, meaning it is much more of a worthwhile investment for policyholders. There are also advantages for individuals to invest in a life settlement, as outlined below.
Current Market Size
According to The Deal, an estimated total of $4.6 billion was paid out to 3,241 policyholders in the year 2020. With the total payout and policies sold being up from $4.4 billion and 2,878 in 2019, respectively, there is tremendous growth potential on the market. The market size continues to increase each year at a slow rate, making it a safe investment for those looking to net a high return.
Current Life Settlement Trends
With life insurance policies being sold to the open market, there has been a substantial rise in investment groups and hedge funds that are investing in life settlements. Not only is the value of each policy expected to increase, but the return on investment for individual investors is also expected to increase. Continuous improvements in medical underwriting have allowed for this positive trend.
As of 2021, there are five states and one territory that do not have regulations on life settlements. This list includes Alabama, Missouri, South Carolina, South Dakota, Washington, DC, and Wyoming. Both Michigan and New Mexico only impose regulations on viatical settlements, and a life settlement provider must first obtain a license through their state Department of Insurance to facilitate the purchase of a policy in the remaining United States locations.
Montage Financial Group continues to monitor any changes in regulation across all fifty states and U.S. territories, and will provide any updates in regulations as they occur. For a full list of states we can do business in, click the link below.
Reach Out To Us For More Information
We understand the life settlement market can be confusing, and thus, we are committed to answering every question you may have before you decide to sell your policy or invest in a settlement. To learn more about how the life settlement market works, or to get started with selling your life insurance policy or investing in a life settlement, reach out to Montage Financial Group by phone at (949) 537-2225 or send us a message online today.