The life insurance settlement market has faced numerous challenges over the last several years, whether due to over reaching legislation or difficult credit markets. Recently however, reports are emerging that show life insurance settlements are still a valuable and sought after asset.
As reported by Derivatives Week, sovereign wealth funds in Qatar, Dubai and Bahrain plan to buy a life insurance settlement bond valued at $1.25 billion US Dollars.
The life insurance settlement bond consists of approximately 300 policies with an average face value (death benefit) of $4 million US Dollars. The polices are placed on U.S. citizens who have an average age of 80.
The bond is a non-rated, zero coupon that will generate a yield to maturity of 6.124%, compounded monthly, per year. The notes will mature in July 2025.
This is a very important report to the life settlement market. While credit markets and institutional lending has eased of late, these markets remain tough to navigate. Life insurance settlements offer institutions bond like returns with an asset class noncorrelated to equity markets.
Essentially this means that while institutions such as larger investment banks and insurance companies are holding record amounts of cash, they still see life insurance settlements as an extremely valuable asset and are willing to pay for them.
As a consumer, or someone considering a life insurance settlement, this type of announcement shows that these assets are valuable and worthwhile to the large institutions that typically purchase them. It also shows that the life settlement market will continue to grow and expand.
If you are considering a life settlement, or would like to learn whether a life settlement is right for you, please visit LIVEpdq.