Life Settlement History

The life settlement industry grew out of the viatical settlement industry in the 1990's. Viatical settlements were similar to life settlement transactions, except they usually involved sellers with life expectancies of less than 2 years. Many of these people were terminally ill with the AIDS virus, and welcomed the extra cash from the sale of their policy. With the advent of drugs that kept AIDS victims alive for a longer period of time, many investors suffered and had to pay premiums for a much longer term than expected. Some scam artists marketed viatical settlements as an investment product, but never used the investors' money to purchase policies for a portfolio. It was clear that if the secondary market for life insurance was to survive, regulation was necessary.