Of my many friends in the life settlements business, many are saying some of the sellers have gone away. Compared with last year, the anecdotal comments are that there aren't as many sellers right now trying to rid themselves of policies as there were last year. Oddly enough, life settlements were never considered as a tool for those needing cash first and foremost. Meaning, it wasn't used by the same demographic as say a reverse mortgage. Life settlements were thought to be an estate planning and financial planning tool of the more affluent. The average life settlement is for a $1.7 million policy. A policy that large, typically isn't held by someone who isn't affluent.
However, an argument could be made that sellers of all tax brackets came out of the woodwork last year in an effort to generate liquidity and remove expenses. So why, have the number of sellers seemingly widdled down this year? Is it because they know the market exhibited conservative buying over the past 2 years, they don't need the liquidity they previously did or are life settlements not the most attractive option available now? It may be to soon to tell, but one thing is for sure, if the sellers stay away, the buyers will be improving their offers to compete for the policies that are available.
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