Life Settlements are one of the fastest growing financial planning tools in the age 65 and over affluent market. The financial planning industry is quickly recognizing the importance of this new option. These affluent individuals now have a competitive and more profitable alternative to policy lapses, cancellations, and surrenders. Life Settlements create immediate liquidity from a non-performing asset and allow policy owners to cash out of unwanted and/or unaffordable life insurance policies.
The numbers are staggering… a few statistics will put the opportunity in proper perspective:
- Approximately $15 billion worth of Life Settlement transactions will occur this year. That figure is a 100% increase over last year and another 100% increase is expected next year. The market is expected to grow to over $160 billion over the next several years. (Bernstein Research Report, June 2005)
- Approximately $431 billion of life insurance is currently in force.
- Since 2005, the average price paid for a Life Settlement is five hundred percent (500%) higher than the cash surrender value of the policy. (Source: Welcome Funds Inc. files)
- 47% of those over age 65 own life insurance. (Bernstein Research Call)
- 90% of policies lapse or are surrendered annually, hence, the majority of policies do not remain in effect. (Insurance Information Institute, 2004)
- 59% of Life Settlement clients are between ages of 71-80. (National Underwriter)
- By 2030, there will be about 70 million older Americans, more than doubling the 1990 number. In the year 2000, about 13 percent of the population was age 65 and older. In 2030, that rate will increase to 20 percent, or one in every five Americans. (U.S. Census Bureau)
*According to the Insurance Information Institute, 2004