Life Insurance Secondary Market

The life insurance secondary market is the market where existing life insurance policies are bought and sold after issuance. You bet your life insurance shows this market evolving from AIDS-crisis [[ViaticalSettlement|viatical settlements]] into broader [[LifeSettlement|life settlements]] involving brokers, institutional buyers, medical records, commissions, and portfolio investors.

The market exists because a life insurance policy can have value to someone other than the original beneficiary. If the seller no longer needs the coverage, cannot afford premiums, or wants cash now, a buyer may pay more than surrender value but less than the death benefit.

Key Claims

• The market separates policy ownership from the original family-protection purpose of life insurance.
• Buyers price policies through expected lifespan, premium burden, policy size, and portfolio diversification.
• Sellers can receive meaningful cash but may face [[LifeSettlementPricingOpacity|pricing opacity]] if they do not understand policy value.
• Insurers dislike the market because it keeps policies active that might otherwise lapse.
• The episode presents the market as both useful liquidity infrastructure and a morally uncomfortable asset class.

Connections

• Life Settlement and Viatical Settlement - transaction forms within the market.
• [[CoventryLifeSettlements|Coventry]], Evergreen Settlements, and Jonah Conn - buyer, broker, and seller-side-market context.
• Death-Benefit Portfolio - institutionalized portfolio form.
• Mortality Risk Pricing - pricing mechanism.
• Insurable Interest Boundary - legal boundary around policy origination and later sale.
• Asymmetric Information and Asset-Based Finance / ABF - adjacent economic frames.