By accessing the secondary market for life insurance, policy owners have received five to eight times more cash than then cash surrender value of their policies offered by their insurance companies. Each year 4.5% of all life insurance owned in the united states lapses with no value after years of premium payments. While certainly some life insurance is obtained solely for catastrophic protection for families, a whopping 76% of universal life insurance on seniors aged 65 or over never results in a death benefit being paid.
In recent years as the life settlement market has continued to grow hundreds of millions have been paid to policy owners who found a better option to lapsing or surrendering their life insurance policy. In 2014 approximately $314,000,000 was paid to policy owners and $325,000,000 in 2015. In each of those years the total face amount of life insurance that was purchased was $1.65B and compared to the $112B that lapses and surrenders each year, the market penetration is still in its infancy.