life Settlement Maerket Benefits

Excerpts From The Wharton Study

With a whole-life policy, earlier premiums are greater than necessary to compensate for the low death risk in the early years. As a result, a whole-life insurance policy builds up a surplus from which future premiums can be subsidized. If we assume that policies are priced in an actuarially fair manner, then for any given policyholder, the value of the payment by the insurance company to the policyholder's beneficiaries is projected to precisely equal the total expected value of the premium payments made by the policyholder.

But what if a policyholder's preferences change and he no longer needs the policy he has purchased? The policyholder would naturally wish to receive payment for the value that has built up in the policy by virtue of his surplus payments. Indeed, if it was not possible to cash out of a policy that was no longer needed, uncertainty about future insurance preferences would decrease the value of whole -life insurance to consumers. Life insurance carriers recognize this, so whole-life policies include an option for the policyholder to resell, or "surrender," a policy to the issuing insurer in return for a cash sum.

Surrender values can be thought of as secondary market prices for policies that are set in the primary market for life insurance. Before the entry of viatical and life settlement firms, the life insurance carrier had the potential to exercise monopsony power in the secondary market for its own life insurance policies. Competition in the primary market, however, prevented the incumbent from exercising this power in the repurchase of normal policies—that is, policies for which the insured is of normal health. Primary market competition did not eliminate this monopsony power for impaired policies, and life insurance carriers have historically earned economic rents on the surrender of those policies. CONTINUED

Life Settlement INdustry News 06/20/05

Life Settlements and Real Estate Investing Cash from Life Settlements can boost real estate holdings.Many seniors do not realize that there are no restrictions on the use of their Life Settlement proceeds...

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Premium Financing. Affluent insureds can use leverage to buy life insurance using recourse and non-recourse premium financing. After two years, the coverage may be sold as a Life Settlement, or retained....

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Life Settlement Questions Call 1-877-224-2200
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