9/17/2026 1:48 AM (PST)

When people hear life insurance as an investment, they may think about permanent insurance products that build cash value. There is also another investment concept involving existing life insurance policies: life settlements. In a life settlement, an investor purchases an existing life insurance policy from a policyholder. The investor becomes responsible for required future premiums and, subject to the transaction and policy terms, receives the death benefit when the insured dies. The potential investment return depends on several factors, including the acquisition price, policy face value, future premiums, fees, and the actual lifespan of the insured. Life expectancy estimates are important because they help investors model a potential holding period, but they are estimates rather than guarantees. This makes life settlements different from traditional equity investments. The economics are primarily connected to insurance policy characteristics and actuarial outcomes rather than daily movements in public stock prices. Investors evaluating life insurance as an investment should therefore understand the policy structure, projected cash flows, longevity assumptions, liquidity limitations, and potential risks before making an investment decision.