The Unsettled State of the Life Settlement Market

    by Peter Katt

    Is your old, tired life insurance policy actually worth something more than simply its surrender value?

    That’s what the life settlement market, as it has evolved, would have many older insurance policyholders believe. At first glance, it would appear that the development of a secondary market for insurance policies would offer policyowners a competitive alternative for raising cash rather than simply cashing out their insurance policies at the policy’s surrender value.

    For a very few policyholders, the fair market value of their policies may indeed be worth more than surrender value. But for the vast majority, the transactions make very little sense—unless, that is, you happen to be the agent involved in the sale, earning an enormous commission.

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