The life settlement market is not about Wall Street, an industry group says.

The life settlement market “is, rather, about providing older Americans with the opportunity to profit from an asset for which they have bought and paid,” Doug Head, executive director of the Life Insurance Settlement Association, Orlando, Fla., writes in a letter to the editors of the New York Times.

Head was reacting to a recent life policy securitization article by Times reporter Jenny Anderson.

Anderson reported that investment banks such as Credit Suisse Group, New York, are bundling life insurance policies into bond-like investments in an effort to spread risk and attract institutional buyers and other investors. The gist of the article was that the packaging of life insurance policies for investors resembles the strategy investment banks used to bundle mortgage-backed securities, before the real estate market crashed.

The point of life settlements is to provide older Americans with the opportunity to profit from policies they no longer want or need “at significantly better market values than they would have received by simply surrendering the policy,” Head writes.

Many seniors have seen retirement assets and income decline in the current recession, to the point they cannot afford to pay the premiums any longer, Head writes.

“Selling a policy for substantially more than the cash value in the policy can make a tremendous difference in that person’s ability to maintain his or her standard of living,” Head writes.

Head contends that, in the past 10 years, life settlements have paid policy owners over $10 billion, which he estimates was $6 billion to $7 billion more than the cash surrender value of the settled policies.