The life settlement market provides flexibility and potentially added value for insureds by providing policyholders with an alternative to lapsing or surrendering their life insurance policy to the carrier. Specifically, it offers policyholders the opportunity to sell their policies for more than the cash surrender value, but less than the net death benefit, to investors.

In the US, unlike most other jurisdictions, life insurance policies are considered property. The life settlement market was originally established in 1911 with the Grigsby vs Russell case, when the Supreme Court declared the policyholder has the right to transfer ownership of a policy to a third party.

For the institutional investor, the life settlement market provides an opportunity to access an asset class that has diversification benefits for the seller, a life settlement provides the policyholder with an additional option, alongside home equity lines of credit or reverse mortgages, for example, when considering their broader retirement, inheritance and tax plans. Every year, more than 3,000 life settlement transactions are completed, with numerous reasons as to why this level of deal flow exists.