A life settlement is a sale of an existing in-force life insurance policy to a third party for an immediate lump sum cash payment that is greater than the policy’s cash surrender value. The industry arose as answer to the life insurance industry’s failure to address the needs of policyholders seeking alternatives to surrender or abandonment of their policies.

Individuals selling policies are typically over the age of 65 and own whole life, universal life or term life policies with a conversion feature.  The amount a policyholder will receive for his policy depends on age, medical condition, the type of policy, the strength of the insurance company issuing the policy and the cost of the premiums.

New legislation pending in New York, California, Florida, New Jersey and several other states would encourage seniors to sell their life policies to pay for their custodial health care costs.  If passed, these laws would allow individuals to enter the Medicaid program provided they use the proceeds from the sale of their policies to pay for long term care expenses.

Investments in life settlements are an attractive asset class for the institutional investor. As an “uncorrelated asset” their performance is not tied to other asset classes such as equities and commodities or the health of the economy. Investments in the mortality and longevity asset class can afford investors attractive returns and diversification, but investments in these assets require careful  due diligence,

Edward Stone Law is familiar with all aspects of the life settlement industry.  Please do not hesitate to contact us if we can be of assistance with respect to the sale of your life policy or a life settlement investment, email us at or call us at (203) 504-8425.


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