The world of life insurance settlements witnessed remarkable growth in 2023. This particular year was pivotal, showcasing a vibrant and robust sector that provided billions of dollars to policyholders. This amount significantly exceeded what they would have otherwise obtained by simply surrendering their policies.
In detailed figures, over 3,000 policies found new life through settlements. This transition injected more than $750 million into the hands of the policy owners. When compared to the mere $96 million they would have received from insurers, the impact is stark. This itself added an impressive $650+ million directly to policyholders’ benefits.
The aggregate policy value involved in these transactions surpassed $4 billion, with an average value per policy of around $1.33 million. However, this volume represents just a sliver of the over 9 million policies that lapse or are surrendered annually, featuring a face amount totaling upwards of $642 billion.
The gap between what could be and what is, in terms of financial recuperation from life insurance policies, remains wide. For example, a policyholder was able to turn a policy valued at $65,234 by surrender into a hefty $275,000 through settlement — more than quadrupling its worth. Another scenario saw a $500,000 term policy, on the verge of lapsing into worthlessness, settled for $20,000. These are more than just numbers; they’re life-changing financial upliftments.
Reflecting on 2023, the growth in life settlements was undeniable, yet so was the volume of potential value lost through lapsed or surrendered policies without consideration of settlements. Such oversight underlines a substantial opportunity for financial advisers to guide their clients towards more lucrative decisions regarding their life insurance policies.
