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Executive Summary
Life insurance settlement (LIS) is a US$15 billion global industry that is expected to grow tenfold or more by 2040. It involves the practice of investors (1) acquiring the life insurance policies of living people, (2) paying all future policy premiums, and (3) receiving the proceeds of the policies after the death of the insured. The two key LIS products differ mainly with regard to target market: “Viatical settlements” are targeted at terminally ill life insurance policyholders, and “life settlements” are targeted at insured people who are not terminally ill. Regardless of product, LIS offers both consumers (i.e., life insurance policyholders/sellers) and investors significant potential benefits. For consumers, LIS is a highly attractive option for the disposal of policies that have become unwanted or unneeded due to changing life circumstances or priorities. For investors, LIS both serves as a means of portfolio diversification and provides a relatively low-risk, steady return on investment. The value of LIS as an investment is founded on the certainty of the return on investment in life insurance policies and the notion that this return is not directly correlated with stocks, bonds, and most other investment vehicles.

This article examines LIS exchange and consumption from a consumer-focused public policy and marketing perspective. The authors find that the vast potential of LIS to meaningfully expand consumer choice has yet to be fully realized as a result of two primary factors. First, consumers may often inherently be at high risk to experience vulnerability in LIS exchange as a result of both personal characteristics (e.g., advanced age, poor health, death- or disability-related grief) and marketplace conditions (e.g., product complexity, disadvantageous information asymmetries). Second, opportunities for the abuse of at-risk LIS consumers have been created by inconsistencies and inadequacies in industry regulation. Public policy recommendations are formulated with a view toward facilitating regulatory reform that both protects consumers better and levels the playing field for ethical LIS marketers. The recommendations in this article focus on enhanced information disclosure and consumer privacy, as well as “stranger-owned life insurance,” a type of LIS transaction in which the initial acquisition of the life insurance policy is motivated by a desire to sell it to an investor (i.e., the “stranger”).

Biography
Terrance G. Gabel is Associate Professor of Marketing at the University of Arkansas–Fort Smith. He holds a bachelor’s degree in Marketing from the University of Iowa, a master’s degree in Marketing from Texas A&M University, and a PhD in Marketing from the University of Memphis. His background includes work in the areas of advertising and office automation equipment sales, bank product management, executive-level heavy industrial international marketing management, and freelance writing. Dr. Gabel’s research has appeared in Journal of Public Policy & Marketing, Academy of Marketing Science Review, and Advances in Consumer Research. His main areas of research interest include death-related consumption, globalization, symbolic interactionism, and macrolevel organizational strategy.

Clifford D. Scott is Associate Professor of Marketing at the University of Arkansas–Fort Smith. He holds a PhD in Business Administration from Louisiana State University and a JD from the University of Colorado, Boulder. His background includes national product launches in both the biotech and high-tech arenas and consulting at the Fortune 100 level. His legal analysis of trademarks on the Internet was recently presented as a for-credit “continuing legal education” class for practicing attorneys. Dr. Scott’s work has appeared in the Journal of Consumer Research, Semiotica, and other outlets. His current research agenda focuses on legal aspects of the marketing function.

Journal of Public Policy & Marketing, Volume 28, Number 2, Fall 2009
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