SENIOR
ADVOCATE
SETTLEMENTS
Don't settle when it comes to your settlement
Life settlements are transactions that transfer ownership of a life insurance policy from the policyholder to a third-party.
-
51% of life insurance policies are permanent: Permanent life insurance is the most popular type, accounting for 51% of all policies compared to 34% ownership of term life. Additionally, 15% of policyholders have both types of coverage.
-
Life insurance premiums increase 8-10% for every year of age: Age is one of the largest factors in the cost of life insurance, and over time premiums will increase in correlation with your age. This is due to increased health risks that come with age. Premium increases are less severe when you’re young, usually about 5% per year in your 40s. However, in your 50s premium increases can be 12% annually.
-
U.S. life insurance premiums increased 21% in the second half of 2021: Insurance costs are rising in-part because of inflation. While inflation and premiums are increasing, the value of a death benefit stays the same which means purchasing power is diminished. When it comes time to collect, beneficiaries may find the benefit doesn’t provide the financial protection it was intended for.
-
85% or more of life insurance policies don’t pay a death benefit: Statistically speaking, 85% of term policies and 88% of universal life policies will expire, lapse, or be surrendered before a death benefit is paid. Those statistics represent lost dollars for the policyholders who invest in life insurance without ever fully realizing its value.
-
$200 billion worth of life insurance will be surrendered or lapsed annually through 2027: Even as closed settlements and third-party analyses continue to confirm that life settlements generate higher proceeds for policyholders, people still choose to lapse or surrender their life insurance. In many cases, these policyholders simply don’t know that selling their policy is an option.
-
More than half of Americans don’t know they can sell their life insurance: More than half (55%) of Americans aren’t familiar with life settlements and more than two-thirds (68%) of Americans aren’t familiar with viatical settlements. These policyholders are most at risk for lapsing or surrendering their life insurance for less than it’s worth.
-
$37.5 billion in lost wealth for seniors: The projected $200 billion in life insurance that will be lapsed or surrendered each year is potentially worth $50 billion on the life settlement market. That assumes a payout rate of 25%, the midpoint of the typical life settlement payout range of 20% to 30% of the policy’s face value. Pulling in the London Business School conclusion that life settlements generate four times more than cash surrender value, policyholders receive an estimated $12.5 billion in cash, or less, for these life insurance assets. That’s 25 cents on the dollar, which amounts to $37.5 billion in lost wealth for seniors.
-
The average life insurance policy has a face value of $168,000: The average face value on a life insurance policy, which is equal to the policy’s original death benefit, is $168,000. In total, the face value of all life insurance policies purchased in the U.S. is $3.29 trillion.
-
Life settlements pay policyholders 4X more on average than the cash surrender value: A report from the London Business School estimates that life settlement proceeds from selling a policy are about four times more, on average, than cash surrender values.
-
The life settlement industry is growing 34% per year on average: The life settlement industry is poised to grow substantially in the coming years. Contributing factors include an aging population and generally low balances in retirement savings accounts. Between 2015 and 2025, the U.S. senior population will grow by 38%, and many of those seniors won’t have sufficient retirement savings to replace their working income. Those who have life insurance — estimated to be 50% of seniors — can liquidate those life insurance assets to produce much-needed funding for retirement.