Advisors Take Notice: New Report Forecasts Double-Digit Growth in Life Settlement Market

In spite of rising interest rates and a projected economic slowdown in the year ahead, a number of key forces are likely to fuel steady growth in annual life settlement transactions over the next decade, according to a November 2022 report published by Conning, Inc.

Conning’s 17th annual review and forecast of the life settlements market is titled “Life Settlements: Growing Through Turbulence,” a nod to the high-inflation period that has accompanied the emergence from COVID-19 lockdowns and the uncertain economic environment heading into 2023.

Factors Driving Life Settlement Growth

“Consumers are likely to seek additional sources of income to offset the economy pressures, and investor demand for alternative assets is forecast to remain strong,” said Roberta Lauria, AVP of Insurance Research at Conning. “Both factors are positive for life settlement growth. In addition, the development of a broader, direct-to-consumer life settlement market is likely to widen the number of consumers who can access life settlements.”

The Conning report reviewed the current market for life settlements and presented the firm’s forecast for 2022-2031. The analysts reported that the favorable nature of the drivers of life settlement market growth portends an average annual volume of new life settlements over their 10-year forecast of approximately $5.2 billion.

“For investors, the insurance companies whose policies they purchased continue to be financially strong,” said Scott Hawkins, the Head of Insurance Research at Conning. “The rising interest rate environment is favorable for the premium optimization strategies used by life settlement investors to improve their returns.”

In his recent remarks at the 28th Annual Life Settlement Conference, hosted by the Life Insurance Settlement Association (LISA), Mr. Hawkins pointed to a few key forecasted drivers for the life settlement market in the decade ahead:

1. Economic conditions remain favorable for continued growth
2. Interest in alternative assets (including life settlements) is increasing in capital markets
3. COVID-19 impacts could increase demand for life settlement transactions
4. Rising consumer awareness of life settlements through mass-market advertising
5. Life settlement industry regulations are boosting consumer and advisor confidence in the marketplace

Conning is a leading investment management firm with a long history of serving the insurance industry. Their new life settlement industry research report is available for purchase from Conning by calling 888.707.1177 or by clicking here.

The Growing Awareness of Life Settlements

Each year, billions of dollars in the face value of life insurance is lapsed by seniors over the age of 65, mostly from a lack of knowledge that an unwanted policy may be sold. There are numerous reasons to consider selling a life policy—rather than allowing it to lapse or be surrendered—such as the premiums becoming too expensive, a sudden need for resources to pay for health expenses and long-term care, or simply a desire for funds to improve a retirement lifestyle.

As more seniors and their trusted advisors become aware of this alternative to the lapse or surrender of a life insurance policy, they are interested in learning more about how to sell their life insurance policies each year through life settlement transactions.

The U.S. life settlements industry offers these seniors a potential solution to their immediate cash needs with a simple transaction that is safe, ethical, and well-regulated. They can quickly obtain a no-obligation, fair market appraisal of their life insurance policies and then compare that option to the cash surrender value offered by the insurance company.

Financial advisors play a key role in helping their clients identify sources of cash flow as well as possible areas where they can reduce their discretionary expenses. The life settlement option may be attractive for specific clients who no longer need or can afford their life insurance policies. In these cases, a life settlement transaction can achieve both fiscal disciplines: reduce expenses (by eliminating annual premiums) and raise cash (by selling a policy for immediate payment) at the same time.

As the year draws to a close, this is an excellent time to review your existing client roster and take a close look at all of the life insurance policies owned by your senior clients. If you have any clients over the age of 65 who own policies with death benefits greater than $100,000, you may want to touch base with them and see how their families are faring with their retirement funding needs.

If you identify a client who has a need for liquidity or simply no longer wants to keep their life insurance policy, don’t let them surrender that policy back to the carrier simply because it’s an easy option. Educate them about the life settlement option, and, if they are interested, reach out to us so we can provide a free, no-obligation appraisal of their policy.

The Value of Life Settlements

For the right client and the right circumstances, a life settlement can be a tremendous vehicle for generating immediate cash and eliminating an annual expense. It can also benefit your financial advisory firm by producing an industry-standard referral fee if a client you refer to a life settlement broker is able to arrange for the sale of their policy.

Rising consumer and investor demand for life settlements over the next decade signals a robust market for life settlement transactions. Make sure that you are serving your clients’ best interests by evaluating whether any of them may be good candidates for participating in this safe, ethical and well-regulated secondary market for life insurance.

The Importance of Working with an Experienced Life Settlement Broker

The only way to make sure that you or your client is obtaining the maximum value for a life insurance policy is to work with an experienced life settlement broker who has a fiduciary duty to represent the consumer’s best interests. For more information, please visit welcomefunds.com or call 877.227.4484.