Industry Overview

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The life settlement market evolved from the viatical settlement market which emerged in the 1980s and early 1990s as a response to the AIDS epidemic. Terminally ill AIDS patients needed away to pay for very expensive medication and treatment. Investors were looking for different investments with strong returns. They offered terminally ill policy holders lump sum payments in exchange for their policies., Since the early days of viaticals, the life settlement market has experienced tremendous growth, approximately $31 billion in transactions as of 2009, due to seniors seeking alternative options for saving money and raising funds by selling their life insurance policy as opposed to letting it lapse. Over 80% of universal life policies eventually lapse, which means policy owners may not be capturing the full potential of their life insurance policies and the life settlement market.

The Census Bureau estimates that 78 million Americans will retire in the next twenty years.Furthermore, high profile institutions, such as AIG, Citibank, Credit Suisse, Deutsche Bank, Morgan Stanley, and UBS have entered the marketplace. The steady supply of life insurance policies and the increased demand by investors should allow the life settlement market to continue consistent future growth.

(Source: Conning Research & Consulting, Inc; U.S. Government Accountability Office)