Who is making money in the life settlement market and how??

Question

I understand the the life settlement/viatical industry started out

when aids caused those afflicted with the condition to sell their

life insurance policies to either use or enjoy a percentage of the

death benefit while still alive.

and since convenience always has a cost--people like warren

buffet and others with vision and available operating capital

would buy large bundles of these policies at a discount and

make a profit upon the death of the policy holder.

the sales by aids patients has leveled off and the sales of

policies initiated by sales organizations in structured format

to take advantage of the mortality tables used by insurance

companies when the sell policies that 85% of policies laps

before death so those that hold a policy the full term get

a much higher return on investment than they would if they

cashed out early. there is money being made on all of these

transactions--who is positioned the best to profit???

Answer 1

Attorneys.  Because regardless of how things come out between the insureds, insurance companies, and investors, the attorneys always get paid from all parties.

Answer 2

I almost ignored this question without knowing why you were asking.  I get it now.  Unfortunately, the life settlement market was really developed in a sophisticated enough environment so that everyone involved could wash their hands.  That just means it'll be more of a challenge for your guy to find legal fault.  Am I getting warm?

Finance firms are big, investor firms are huge, brokers and BGA's are sometimes gullible when money is involved, and insurance companies occasionally know more than they let on to their re-insurers.  

If you were local, I'd say "let's do lunch", how about email me?  I'll help you find a niche.

Answer 3

The companies who buy the insurance contracts from terminally ill people are the ones who benefit the most. Well, I will say they are betting that they will get the death benefit before many years go by. Why? If it takes long for the person to die, it takes money out of the investment of the contract. The sooner someone dies, the more money they make.