Aspire Life Settlements Ltd, Surrey, BC

A Life settlement occurs when an individual, typically 75 years of age or older, sells his/her Life Insurance policy to a third party for a lump sum. The cash purchase is greater than the cash surrender value but less than the net death benefit of the policy. The third party becomes the new owner of the policy, pays the monthly premiums, and receives the full benefit when the life insurance policy matures. Investment characteristics could be described as a reverse annuity; Investor makes a series of payments (premiums) in exchange for the future payment of a lump sum (death benefit). The Life Settlement industry has created many opportunities for individuals to sell, transfer or trade what has traditionally been one of their largest assets, in a secondary market place. This flexibility has changed many lives when historically, the only way to recoup any cash from a policy is through a loan or to turn the policy in for its cash surrender value which typically is much less that what the policy could be sold for on the secondary market. What once was a very illiquid market has changed. Life Settlements have become a viable alternative for retired individuals as they plan their future financial needs. Historically, according to the actuarial consulting firm of Milliman & Robertson, 90% of all universal Life policies lapse or are surrendered back to the life insurance company prior to maturity. Essentially, the insurance companies had created a market situation where the only option a person no longer in need of insurance company was to “sell back” the policy to the issuing company for the cash surrender value. The Life Settlement industry has created this secondary market lessening the monopsony power of the insurance companies and creating a free market for life insurance policy owners to sell as they deem fit. Additionally, it has given accountants, financial planners and brokers another tool to utilize in the estate planning of individuals.