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Life Settlements 2022

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What You Need to Know

  • The pandemic could start to affect how policies see life expectancy.
  • People who suffer from long COVID may need to cash in policies to cope with that.
  • Life settlement providers might have to continue to compete with new and improved life insurer cash value offers.

As we close out 2021, agents and advisors should be looking at several key areas concerning the life insurance settlement market in the coming year.

The impact of COVID-19 on the marketplace will become clearer, more boomers will enter the market, more insurance companies will be offering a new twist on surrendering policies, and graysheeting practices will be called out.

1. Will there be a COVID-19 “effect” on life settlements?

We expect that within the next 12 months, we will have a better idea of the long-term impact of the COVID 19 pandemic upon the life settlement marketplace.

We learned in 2020 that the average American’s life expectancy plunged by a full year due to the pandemic. The average person lived to be about 78.8 in 2019 but it dropped to 77.8 in 2020.

With COVID-19 impacting seniors more than young people, it will be interesting to see if medical evaluations involving the pandemic will impact life settlement offers.

At the same time, we expect that more seniors who have tested positive and are dealing with “long haul” COVID symptoms may choose to look at life insurance life settlements as a way to help pay for medical costs

We don’t yet know the impact that chronic conditions arising from COVID-19 will have on the market. Research firm Conning said in its annual research report that its experts believe more COVID long haulers will settle policies this year.

2. The boom is on.

Baby boomers will continue to have a major impact on the market. For the past several years and the foreseeable future, many prime life settlement candidates will be the baby boom generation. They represent a well-educated deep-pocketed audience that is currently navigating the retirement landscape in ways never before seen.

The sheer number of baby boomers and their penchant to buy life insurance means that they will have an impact on the market for a long time.

More on this topic

We expect more boomers will be asking agents about life settlements and looking for education about life settlements to ensure that they know what the option is. Perhaps they won’t be making a decision right away, but they will want to be educated and know their options for the future.

3. Life insurers sneak into the market with enhanced surrender values.

Some life insurance companies have started to offer “enhanced” cash value offers to clients. The scuttlebutt in the industry is that some large insurance insurers have analyzed the policies that they have on the market and are actively trying to get clients to surrender policies via higher cash value offers. They either see dollar signs or vulnerability. Perhaps they believe that continuing growth of life settlement represents an existential threat.

Regardless, I say: Bring it on.

We don’t believe that any enhanced cash value offer will beat a life settlement. At our firm, we appraise huge numbers of policies, and most are worth dramatically more than the cash surrender value. We don’t believe that enhanced offers will make an impact on our industry, though they may market them at such a great expense and therefore try to drown out our messaging.

My guess is that the policy attributes that make for an enhanced cash value are the same that make for an attractive life settlement. We will likely beat those offers too.

4. Graysheeting is heating up.

Graysheeting is a troubling trend in the life settlement industry, as agents and advisors are unwittingly handing over life insurance policies for sale in a marketplace that chronically undervalues them.

The market has been inefficient for many years, and brokers and providers continue to convince agents and advisors that they should sell their policies on the open market without an appraisal. The purchasers of policies are essentially colluding to generate lower offers to agents and advisors who are not properly educated about policy value.

We believe that more brokers and providers will be called out for these practices in 2022. We hope that this will contribute larger offers for agents and their clients.

The life settlement industry continues to evolve and this year has been no exception. We see continued growth for the industry as more agents and advisor educate their clients about the value of life settlements and how they can contribute to a better retirement.


Wm. Scott Page (Photo: PolicyAppraisal.com)Wm. Scott Page is the founder of PolicyAppraisal.com.