Steady, Stable, and Strong: Life Settlements Enter a New Phase of Sustainable Growth

The 2025 Conning Strategic Study: “Life Settlements – A Pause for Now” marks the 20th year of Conning’s in-depth analysis of the secondary life insurance market. After years of steady expansion, the industry saw a pause in 2024- not a reversal, but a reflection of tightening capital conditions and macroeconomic headwinds that reshaped investor behavior.

Despite slower new settlement activity, Conning’s findings underscore a key point: the fundamentals of the life settlement market remain sound, and the long-term outlook continues to strengthen.

Macroeconomic Friction, Not Structural Weakness

1. Higher-for-Longer Rates Reshaped Capital Flows

The Federal Reserve’s inflation fight created a “higher-for-longer” rate environment that rippled across all asset classes. The 10-year U.S. Treasury averaged 4.21% in 2024, up from 2.54% a decade earlier.

That was a mixed blessing for the industry:

Life insurers benefited from improved investment spreads and higher UL crediting rates.
But investors saw higher borrowing costs and greater competition from traditional fixed-income yields, reducing short-term appetite for illiquid assets like life settlements.

Conning estimates that the total 2024 life settlement volume declined to $3.6–$3.8 billion, down about 14% from 2023. However, the in-force face amount climbed to $30.1 billion, reflecting continued investor commitment despite tighter liquidity.

2. Inflation and Recession Anxiety Damped Risk Appetite

Persistent inflation and slowing global growth also drove portfolio caution. Advisors and allocators leaned toward shorter-duration or inflation-sensitive assets, delaying new life settlement allocations.

Even though investors sought diversification, the immediate demand for liquidity limited inflows into long-duration, alternative investments. Conning notes that this is a temporary capital allocation effect, not a fundamental rejection of the asset class.

3. Credit Constraints Added Drag

Credit scarcity forced investors to keep more capital in reserve for premium payments rather than purchasing new policies, further slowing market turnover.

Structural Tailwinds Remain Intact

Despite the 2024 pause, Conning emphasizes that the core drivers of long-term growth remain favorable.

1. Demographics: The Aging Catalyst

The U.S. senior population is projected to grow 18% between 2025 and 2034, from 63 million to 75 million individuals. As Baby Boomers age, the demand for liquidity, long-term care (LTC) funding, and retirement income solutions will increase, expanding the pool of policyholders eligible for life settlements.

2. Rising Healthcare Costs

The median annual cost of a private nursing home now exceeds $127,000, nearly double the 2004 level. Home health care averages $77,792 annually. With public LTC funding under strain, life settlements offer an alternative liquidity source for retirees facing mounting care costs.

3. Investor Demand for Alternatives

Institutional allocations to alternative assets continue to expand. Global alternative AUM grew from $7.2 trillion in 2014 to $18.2 trillion in 2024 and is expected to reach $29.2 trillion by 2029.
For investors seeking yield and diversification, life settlements, with their generally low correlation to equity and bond markets, remain an attractive niche.

4. Improving Returns via Higher UL Crediting Rates

Median universal life (UL) crediting rates reached 4.0% in 2024, with most policies ranging between 3.6% and 4.5%. These higher crediting rates reduce premium costs and support stronger investor returns on existing portfolios.

Emerging Growth Drivers for Life Settlements

1. The Rise of Direct-to-Consumer (D2C) Life Settlements

Conning identifies direct-to-consumer marketing as a game-changer. Several providers have launched national advertising campaigns aimed at educating policyholders directly about life settlements.

The firm estimates that even a modest 1–5% increase in consumer awareness could add $25–$100 billion to the market’s gross potential. This shift could also normalize the conversation among financial advisors, who are increasingly required by fiduciary standards to disclose alternatives to lapsing or surrendering life insurance policies.

2. Stable Regulation and Growing Professional Acceptance

The regulatory landscape remains stable. At the same time, fiduciary and best-interest standards are prompting financial professionals to proactively discuss life settlements with clients as part of holistic planning, especially when policies are no longer needed or affordable.

By the Numbers: Life Settlements at a Glance (Conning 2025)

Looking Ahead: A Market Ready to Reaccelerate

Conning’s 2025 study makes clear that the “pause” in 2024 represents a cyclical adjustment, not a structural decline.

As interest rates moderate and investor appetite for life settlement investing returns, the firm expects renewed growth in both secondary and tertiary life settlement markets, driven by:

Expanding consumer access via direct marketing,
Favorable long-term interest rate dynamics,
Persistent demographic tailwinds, and
Increasing institutional acceptance of life settlements as a legitimate alternative asset.

In Conning’s words, “The life settlement market may have paused in 2024, but the long-term forces favor renewed growth over the coming decade.”

Conclusion

For asset allocators looking to invest in the space, the message is clear: life settlements remain a viable, maturing asset class for both investors and clients seeking value from underutilized life insurance.

As regulatory clarity improves and public awareness grows, advisors who understand this market are positioned to help clients unlock significant hidden value, while diversifying their own portfolio strategies in a volatile macro environment.