Life Settlement Established

Life Settlements began in 1911 with an idea as a terminally ill patient was looking for ways to cover medical expenses. Dr. A.H. Grigsby maintained treatment John C. Burchard who needed a surgical operation without the ability to cover the medical treatment cost. Dr. Grigsby and Mr. Burchard agreed to a transaction which allowed Mr. Burchard to sell his Life Insurance to Dr. Girgsby for a lump sum payment of $100 and an agreement to pay for all remaining premiums. Later upon Dr. Burchard’s passing, Dr. Grigsby was met with a legal challenge to the arrangement by R.L. Russell. The case eventually reached the U.S. Supreme Court, where Justice Oliver Wendell Holmes Jr. delivered the opinion of the court.

“So Far as reasonable safety permits, it is desirable to give to Life Insurance Policies the ordinary characteristics of property. To deny the right to sell except to persons having such an interest is to diminish appreciably the value of the contract in the owner’s hands”.  – Justice Oliver Wendell Holmes Jr.

Justice Holmes’ decision established a fundamental principle that Life Insurance is is private property, which can be assigned at the will of the owner. Extending decades beyond Justice Holmes’ decision, the Health Insurance Portability and Accountability Act (HIPAA) in 1996 signed into law by President Clinton further supported ownership transfer and/or beneficial interest to a third party through a transaction now referred to as Life Settlement.

A New Market Created

Life Settlements are dramatically different than viatical settlements which provide a legal & regulatory framework for patients suffering from a terminal illness of less then 24 months. While Life Settlements consider the insured’s health in underwriting and evaluation, many Life Settlement investors have a long time horizon and are seeking stable investments free from volatility and uncertainty of the existing financial markets. Many investors prefer Life Settlement as an alternative to stocks, bonds and many other investments based on existing financial markets due to their non-correlated nature against these existing asset classes.

What exactly is a Life Settlement and how can you benefit? Check out some additional details about how a Life Settlement works.