According to a recent report by Moody’s Investors Service in New York, the life settlement industry might be taking a slight hit from what is otherwise a very positive overall trend. According to the report, decreasing mortality rates mean that the life insurance industry is gaining on their investments since people are living longer and paying more premiums before a payout is required.
However, the report also noted a “substantial decline of new life insurance sales for the industry in recent quarters” for a variety of reasons, including increased scrutiny of life insurance settlements which has “put pressure on insurers’ credit profiles,” according to Arthur Fliegelman, vice president and senior credit officer at Moody’s Investors Service.
The report notes the slippery slope the insurance industry is on when it comes to senior life settlement policies: too few policies being cashed in hurts the ability of insurance companies to finance insurance plans for people over 70; but too many life settlements being cashed could result in increased government regulation.