Life expectancy providers are deeply embedded in the longevity and mortality world, providing insights for life settlement policy buyers in both the secondary and tertiary markets on how long an individual can be expected to live. A consequence of doing this year-in, year-out is the wealth of mortality data we compile: This data, drawn from thousands of predominantly affluent insured individuals, offers nuanced insights into longevity that go far beyond standard actuarial tables.
Financial advisors are also deeply embedded in the longevity and mortality world, because a critical component of their service offering is helping ensure their clients have enough money to last as long as they do. With the U.S. senior population projected to increase to 82 million by 2050, according to Population Reference Bureau estimates, the need for precise planning has never been greater.
But the two groups rarely talk to each other. The life settlement market, often overlooked by mainstream financial planning, can provide a unique lens into the lifespans of high-net-worth seniors. By leveraging this data, advisors can address a critical gap: under (or over) estimating how long wealthy clients might live, which can lead to inadequate income strategies.
Understanding the Life Settlement Market
Participants in this market are not your average Americans. In order to sell a policy to an investor, individuals usually need policies with death benefits of at least $100,000, and the majority are over 70 years old. Data from the Life Insurance Settlement Association (LISA) shows that in 2024, life settlement payments averaged over 6.5 times the cash surrender value of policies sold, injecting an additional $223,000 on average into seniors’ pockets compared to lapsing or surrendering policies. Real-world examples abound: a $1 million policy might fetch $400,000 in a settlement, far exceeding its surrender value, providing immediate liquidity for retirement needs like healthcare or legacy planning.
What sets this market apart is its general focus on wealthier demographics. Life settlement insureds tend to hail from higher socio-economic groups – they’re more educated, have greater access to quality healthcare, and often lead healthier lifestyles.
At the heart of every life settlement are the life expectancy (LE) reports, prepared by life expectancy providers. Policies are underwritten by reviewing extensive medical histories, lifestyle factors, family genetics, and even socio-economic indicators. This process isn’t just about pricing a policy; it aggregates into a vast dataset revealing mortality patterns unique to affluent seniors. For instance, while general U.S. life expectancy hovers around 78 years, our data often shows extensions of 5-10 years for this cohort due to better preventive care and resources.
The market’s growth underscores its relevance. With 10,000 Americans turning 65 daily, the life settlement industry is poised for expansion, potentially unlocking billions of dollars in value that seniors otherwise leave on the table by letting policies lapse. Yet, for financial advisors, the true value isn’t in facilitating settlements – though that’s an option – but in borrowing the mortality insights the life settlement industry provides to enhance client planning.
The Wealth of Mortality Data in Life Settlements
Life expectancy providers in the settlement market have unparalleled access to mortality data tailored to wealthier, older American seniors. Unlike broad actuarial tables, which average across diverse populations, this data is granular and skewed toward the affluent, drawing from medical underwritings that include detailed records: lab results, physician notes, prescription histories, and even biometric data from wearables in some cases.
This aggregate data reveals key trends. For example, wealthier seniors exhibit lower mortality rates from chronic conditions like heart disease or diabetes, than the average American, thanks to early interventions and premium healthcare access; life settlement populations require ongoing adjustments to underwriting frameworks because they outlive expectations attributed to the general population.
Why does this matter? Because inaccuracies in life expectancy can skew financial models. In life settlements, underestimating LE leads to overpaying for policies, as investors must fund premiums longer than anticipated. We’ve seen market dislocations when actuarial assumptions shifted due to improved longevity, affecting valuations. But aggregated anonymously, this data forms a powerful resource: a mortality curve refined for those who are more likely to use a financial advisor.
This isn’t hypothetical; accurate data protects all parties, and in aggregate, it paints a picture of extended lifespans driven by wealth. Financial advisors, who often rely on generic tools, miss these nuances, potentially leaving clients vulnerable to either outliving their savings or sacrificing lifestyle in their later years and leaving too many resources on the table after they pass.
Applying Insights to Better Model Retirement Income Needs
Financial advisors can revolutionize retirement income modeling by integrating lessons from life settlement mortality data. Traditional planning uses probabilistic models based on average lifespans, but for wealthy clients, this can underestimate longevity, leading to conservative or insufficient income streams. By adopting refined mortality insights, advisors can create more resilient plans.
Consider the core challenge: retirement income must cover essentials like housing, healthcare, and leisure, often for 20-30 years post-retirement. Standard tools, such as Monte Carlo simulations, input average LE, but life settlement data suggests adjustments. If a client’s profile matches a life settlement dataset- say, a 70-year-old with excellent health and high income – their LE might be 90-95 years, not 85. This extra decade requires 20-30% more savings to maintain lifestyle.
Benefits are multifaceted. First, accuracy fosters trust; clients appreciate personalized projections. Second, it mitigates longevity risk – the risk of outliving assets. Third, it opens doors to innovative products.
To access this data, advisors can partner with LE providers for anonymized aggregates or custom reports. As the market grows – with secondary market transactions in life settlements injecting hundreds of millions of dollars annually – collaboration could standardize these insights.
In practice, this means shifting from macro to micro modeling. The result? Wealthier clients retire with more confidence, knowing their plan accounts for their likely longer, healthier lives.
Conclusion: A Call for Cross-Industry Collaboration
The life settlement market isn’t just a niche for policy sales; it’s a goldmine of mortality data that can elevate financial advising. By looking beyond traditional sources and embracing these insights, financial advisors could produce more accurate retirement income models for their clients and their businesses.
Chris Conway is Chief Development Officer at ISC Services
Any views expressed in this article are those of the author(s) and may not necessarily represent those of Life Risk News or its publisher, the European Life Settlement Association