Dating Death: An Empirical Comparison of Medical Underwriters in the U.S. Life Settlements Market

The value of a life settlement investment, which is a traded life insurance policy, is highly dependent on the life expectancy (LE) of the insured. We empirically demonstrate that LE has been the key driver in life settlement pricing, and we illustrate its relationship to the expected internal rate of return (IRR). Based on the analysis of life settlement transaction data from 2011 to 2016, we trace the patterns of LE estimates in both secondary and tertiary markets by major medical underwriters, and investigate systematic differences in their estimation.