The secondary market for life insurance was more than 100 years in the making.

Grigsby v. Russell (1911) established the policy owner's right to transfer an insurance policy. Justice Oliver Wendell Holmes noted in his opinion that life insurance possessed all the ordinary characteristics of property, and therefore represented an asset that a policy owner could transfer without limitation. This opinion placed the ownership rights of a life insurance policy on the same legal footing as other investment property, such as stocks and bonds.

The decision established a life insurance policy as transferable property that contains specific legal rights, including the right to:

• Name the policy beneficiary
• Change the beneficiary designation (unless subject to restrictions)
• Assign the policy as collateral for a loan
• Borrow against the policy
• Sell the policy to another party

In 2001, the National Association of Insurance Commissioners (NAIC) released the Viatical Settlements Model Act, defining guidelines for avoiding fraud and ensuring sound business practices.

Finally, the arrival of well-funded corporate entities transformed the settlement concept into a regulated wealth management tool for high-net-worth policy owners. Strong demand for life settlements policies is driving today’s rapid market expansion.