End of a Monopsony
Imagine a world where you were only permitted to sell your house back to the builder, your automobile back to the dealer and your stocks back to the issuing corporation. This is what a world without secondary markets would look like, and this is the world that life insurance policyholders have traditionally encountered.

Before the emergence of the secondary life insurance market in the late 1990s, the originating insurer was the only potential purchaser for your expendable business life insurance contracts, thereby restricting your policy disposition options to receiving an artificially low cash redemption value. Because the insurance companies set the re-purchase price, policyholders traditionally received little economic value from their superfluous life contracts, on average just 4% of the policy's face value⁵.

Fortunately, the life settlement industry has replaced this monopsony (an anti-competitive market situation in which a seller is only permitted to sell to one buyer) with a free market alter-native wherein companies competitively bid to acquire the rights and obligations in your dispensable business life policies. This vibrant marketplace enables you to retrieve the fair market value from these otherwise illiquid business assets. With the average life settlement payout today being 20- 25% of the face value⁶, a life settlement can be an effective tool for liberating substantial liquidity hidden within a dormant business asset.

Caveats
Although selling your unnecessary business life policies in the secondary life insurance market can be profitable, navigating the labyrinthine life settlement marketplace can be challenging. The nascent life settlement industry, in general, lacks ample due diligence and transparency as well as knowledge of and services responsive to the unique needs of retiring entrepreneurs in the process of selling their companies.

Analyzing the expendability of your business life policies, coordinating the sale of your obsolete policies with the sale of your company, safeguarding your privacy and securing the highest quality institutional offer demands specialized advisory skills in exit planning, business life insurance and life settlements. Working with an independent advisor who has expertise in these disciplines is the key to a successful, efficient transaction.