The life settlement market is positioned for long-term expansion, as increased investor demand for assets with low correlation to traditional financial markets converges with an ageing population, rising retirement and long-term care funding needs, and broader direct-to-consumer awareness, according to Life Settlements: Positioning for Long-Term Expansion, a new study from insurance asset management firm Conning.
The study, now in its 21st year, says that the average annual gross market potential for life settlements is approximately $228bn – but the average annual volume of new life settlements (the secondary market) is approximately $4.4bn.
Glass-half-empty types would say that’s quite a gap. Those with a glass-half-full perspective say that this represents a huge opportunity. There is a nuance here, which is that data for the tertiary market is not available, but for Scott Hawkins, Head of Insurance Research at Conning and author of the study, a few things need to change for secondary market activity to deliver meaningful change.
“To increase the annual volume, we see three main factors that need to come together,” he said.
“First, we think consumer and advisor awareness needs to be increased. Second, the life settlement process needs to be more standardised to support lower-face (sub million dollar) policies. Third, there needs to be enough capital willing to invest in life settlements to support that growth.”
A persistent lack of consumer and advisor awareness (according to many in the life settlement market) is a topic that comes up consistently at industry events and in the media, and plenty of initiatives exist industry-wide to close what is currently an education and awareness chasm at the policyholder and adviser level.
Indeed, Hawkins points to the adviser cohort specifically as a group that the life settlement market might think about focusing more on to help address the awareness shortfall.
“Our view is that annual volumes are low primarily because life settlements are a niche solution that not enough advisors discuss with their clients,” he said.
“The D2C [direct-to-consumer] life settlement firms such as Coventry and Abacus are pointing the way with mass-advertising, but advisors also need to be aware of life settlement option.”
Whether a greater degree of standardisation in the lower face value part of the market can be achieved at scale remains to be seen, but the question of attracting capital is something the market does have information on.
Conning has, for the past two years, published a report based on a survey of life settlement investors and market participants with the European Life Settlement Association, publisher of Longevity and Mortality Investor. In the 2025 ELSA–Conning Life Settlement Investor Sentiment Study (the most recent edition, published towards the end of last year), investors were asked about what contributes to any positive views they have towards the life settlement asset class, and for the second year running, diversification (83%) and lack of correlation to broader financial markets (79%) were the top two answers.
Actuarial assets like life settlements have a lower natural correlation to broader financial markets because longevity risk, the main investment risk in the space, is not a financial risk. But that doesn’t mean that capital allocators are waiting with a blank chequebook for the next life settlement securitisation or pooled investment fund to come knocking at their door.
“That capital interest will depend on how the life settlement risk/return profile compares to other investments. Investors looking at alternative capital have a variety of options available to them,” said Hawkins.
A popular topic in financial media circles currently is that of life and annuity insurer risk as a counterparty, particularly in the US. Certain complainants have suggested that insurers investing capital they receive from annuity purchases, both individual and bulk purchase annuities, into private assets is an investment play that is too risky.
Add to that the recent rehabilitation and liquidation of PHL Variable Insurance Company (and two captives) and investors might be forgiven for being extra cautious in allocating to asset classes exposed to life insurers.
But reading this new report from Conning might provide them with a little comfort.
“The financial strength and economic performance of the life insurance companies that issued settled policies is a crucial aspect of risk management for the life settlement investor…. We track the performance of those 41 companies against the remaining life insurance industry to understand the impact life settlements may have on life insurer performance. At the end of 2025, those 41 target companies had a weighted average RBC higher than the weighted average life insurance industry,” says the report.
While Life Settlements: Positioning for Long-Term Expansion highlights what it considers to be the main tailwinds supporting growth in life settlements, that doesn’t mean that investors in the space can sit back, set it and forget it. Despite insurance policies taking years, and sometimes more than a decade, to mature, successful investing in the asset class requires an active approach, and Hawkins, while bullish generally, acknowledges that certain headwinds exist that will need to be considered.
“The long-term forces supporting the life settlement market remain favourable, but the path to growth is becoming more complex,” he said.
“Market participants will need to expand consumer access while carefully managing policy supply, insurer exposure, financing, and emerging longevity risks.”
