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What are Life Settlements and their History?

“The life settlement industry was born in the 1980s AIDS crisis, as afflicted individuals sold

their life insurance policies for cash to pay for medical bills and enhance their final days.”

Life Settlements

Life settlements are investment vehicles where investors purchase life insurance policies on seniors with a life expectancy of 3 to 15 years for an amount higher than the cash surrender value and less than the policy face amount. Investors receive a return based on the price paid for the policy (inclusive of premiums) and the death benefit received.

The History of Life Settlements:

The life settlement industry was born in the 1980s AIDS crisis, as afflicted individuals sold their life insurance policies for cash to pay for medical bills and enhance their final days. When the cure was discovered, the industry then focused on old-age mortality.

During the 1990-2000s, major Wall Street firms such as Goldman Sachs, Credit Suisse, Deutsche Bank, Berkshire Hathaway, and AIG discovered the non-correlated nature of life settlements, along with healthy gross returns in the 12% - 14% range. Since 2010, there has been an increase in licensing regulations, with life settlement transactions becoming regulated in most states. Licensing of life settlement brokers and providers became mandatory, along with the transparency of the entire process and fee structure.

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Special Thanks to our Contributor

RiverRock Logo

RiverRock is a dedicated life settlements investment manager with over ten years of experience managing pooled investment funds investing in the secondary and tertiary markets for life insurance policies.

Hugh P. Tawney Director of Sales Office: +1 713.375.1307 Mobile: +1 410.952.2374

RiverRock is not affiliated with and does not endorse PrimeAlpha Insights.

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