9/28/2026 10:37 PM (PST)

What is a life settlement investment? It is an investment involving the acquisition of an existing life insurance policy, generally for more than its cash surrender value but less than its death benefit. The investor assumes the required future premium obligations and may receive the death benefit when the insured passes away. Unlike an investment whose value changes every trading day, the economics of a life settlement are primarily connected to the policy itself and the insured's longevity. Life expectancy estimates are therefore an important part of evaluating the investment. An actuarial estimate can help model a potential holding period, but actual longevity may differ significantly from the estimate. Investors should also consider the purchase price, future premiums, policy terms, fees, expected cash flows, and liquidity before making an investment decision. Understanding what is a life settlement investment means looking at both its potential diversification characteristics and its risks. It is generally a long term alternative asset and should be evaluated in the context of the investor's complete portfolio.