More recently, the trend has been to market the idea directly to the public. This method has borne significant fruit for the industry and consumers are now much more aware of the option of selling their life insurance. The trend seems likely to continue in the next few years.
- Number of Qualified Policies is on the Rise
While there is an overall decline in the amount of policies out there, the volume of policies eligible for purchase is growing. Not only has the number increased, but the quality of policies in the market has increased too. There are several reasons for this;
Divorce rates are on the rise
People often name their spouse as a beneficiary in a policy. After divorce, there is no longer a need or a desire for this arrangement to continue. In some cases, the beneficiary can be changed, but in others it cannot. These latter clients will often choose to sell the policy and purchase a new one with the new release of cash.
Rising premium costs
Many seniors struggle to meet costs each month, and a rise in their premiums will often persuade them to sell. Some may sign up for a more affordable policy, while others use the money for their immediate needs. The fact that younger family members are often capable of taking care of themselves means that a lot of seniors will choose to sell their life insurance policy, and use that money to supplement their pensions.
An ever-expanding population of mature customers drives this trend. The number of people aged sixty-five and over was 42 million in 2012 and is predicted to rise until it reaches 70 million in 2030. The life settlement market is expected to rise with it.
Good pension funds
If a person already has a good pension fund and enough savings to leave their family a good inheritance, then a life insurance policy may be unnecessary. People in this position are choosing to sell their policies and invest the money in something that gives a better return.
Investing in the markets is becoming more popular
Just one decade ago, stocks and shares were a mystery to the majority and investing in the markets was the domain of relatively few people. Today’s consumers realize that it’s not as complicated as previously thought. Many are choosing to sell their life insurance to free-up funds for investments in the foreign exchange or stock markets.
Number of policies for purchase has increased
The increase in policies available to purchase can be traced back to the fact that brokers and life settlement providers now have a better understanding of the policies that are investor-qualified. This, along with growing consumer awareness makes for a genuinely lucrative trend.
It’s mandatory in several states that life insurance companies tell their customers about the life settlement market. Some states have proposed that life settlements should fund Medicaid, while others even go so far as to classify life insurance in conjunction with a Medicaid application as an asset.
- Major Capital Returning to Life Settlement Markets
In 2018, two big life settlement investment funds raised close on $900 million. This growing stability in the life settlement industry is showing a marked increase in investor interest. Also, there are now more regulations in place to protect buyers and sellers of policies. The result is that major players have returned both consistent capital and expertise to the market.
As more and more investors see the advantages, capital will continue to flow into the market. This will fuel the increasing trend towards policy price and value causing more sellers to enter the market.
Finally, the industry as a whole is now better regulated and has gained access to a good flow of capital to fund policy purchases. Plus, it has a firm foundation of good business practice developed by advanced tech systems. Looking to the future, the life settlement industry is expected to continue a substantial level of sustainable growth.