History of Life Settlement
Welcome to our History of Life Settlements page! The life settlement industry has a fascinating journey rooted in providing policyholders with the freedom to unlock the hidden value in their life insurance. What began as a niche option has evolved into a thriving, regulated market that empowers individuals and investors alike. This timeline highlights key milestones that shaped the industry, demonstrating how life settlements have grown to become a vital financial solution for policy owners and a valuable asset class for investors.
The U.S. Supreme Court ruled that a life insurance policy is considered personal property that can be sold or transferred. This landmark case established the legal foundation for life settlements, giving policyholders ownership rights to sell their policies.
During the AIDS epidemic, terminally ill patients began selling their life insurance policies to viatical settlement providers for immediate cash to fund medical expenses and end-of-life care
The first organized effort to bring professionalism and standards to viatical settlements emerged as a way to increase credibility in this growing market.
The concept of life settlements emerged as a distinct market separate from viatical settlements. While viatical settlements focused on terminally ill policyholders, life settlements expanded to include seniors over 65 who no longer needed or could afford their policies.
States began enacting regulations to protect policyholders and increase transparency in life settlement transactions. The Life Insurance Settlement Association (LISA) was formed to promote industry standards.
The IRS clarified the tax treatment of life settlements, providing formal guidelines for how the proceeds from a policy sale would be taxed.
The National Association of Insurance Commissioners (NAIC) introduced the Life Settlement Model Act, setting uniform guidelines for licensing, disclosures, and consumer protections in the life settlement industry.
As the Great Recession left many seniors searching for liquidity, life settlements gained recognition as a way to turn unused policies into valuable financial resources.
The industry experienced substantial growth, with an estimated $3 billion in face value sold annually. Investors began recognizing life settlements as a stable, alternative asset class uncorrelated with traditional markets.
Platforms like LS Hub revolutionized the life settlement process, creating efficiency, transparency, and competition to ensure policyholders receive the highest value for their policies.