The U.S. demographic landscape is rapidly changing. Multiple studies show that one in five Americans will be of age 65 or older by 2040. The aging population will have a tremendous impact on most industries, shapeshifting multiple business environments, including mortality-linked contracts and life settlement markets.

This article will explore the current U.S. elderly demographic trends, the impact of COVID-19, and how accelerated growth in new retirees will affect the U.S. economy — government benefits- and in turn, the Life settlements aka Mortality-Linked Contracts industry.


A life expectancy is shaped by but not limited to the health care system, individual health behaviors, social and economic factors, physical and social environment, and public policies.

According to the U.S. Census Board, Population Projections, more than 46 million older adults, aged 65 and older living in the U.S., and daily, more than 10,000 people turn 65 years of age. The report further states that by 2050, this number is expected to grow to almost 90 million.

Improvements in medicine, vaccines, fitness, and maintaining a healthy lifestyle can be a few reasons for the increase in life expectancy from the late 19th century to the 21st century. However, this data represents statistics of a PRE-COVID 19 era.

According to the latest data from the Center for Disease Control and Prevention, the ongoing pandemic has decreased life -expectancy by 1.5 years– i.e., from 78.8 to 77.3.

“The U.S. has experienced a massive decline in life expectancy in 2020 on a scale that hasn’t been seen since World War II,” said study author Dr. Steven Woolf, director emeritus of the Center on Society and Health at Virginia Commonwealth University in Richmond. “That’s pretty stunning, and it was not experienced on that scale by other countries.”

The continuing global pandemic is redefining our economy, social structures, and policies.

It has a more significant impact on employment. According to the Bureau of Labor Statistics, more than 6.2 million workers of the U.S. labor force were laid off because their employer closed or lost business due to the pandemic.

The repercussions of COVID-19 have led older workers to reevaluate their finances and consider proceeding with early retirement. Most of them have some form of life insurances, and however, not all of them are aware of the life settlement option that can help them increase cash flow to support their lifestyle and afford rising medical and inflation costs, etc.

As more seniors get familiar with an alternative option to extract tangible value from their existing life insurance contracts on the secondary market, more volume and transactions can be seen in the life settlement industry.


Millions of seniors retire each year. However, in 2020 alone, the number of retired Baby Boomers- born 1946- 1964- increased more than before, according to a Pew Research Center analysis of monthly labor force data.

According to the data, in the third quarter of 2020, about 28.6 million elderly employees reported that they were out of the labor force due to retirement. This represents an increase of 3.2 million more senior workers than retired in the same quarter of 2019.

For retirees, Social Security and Medicare benefits play a significant role in income support. With the accelerated growth of more recipients, there is a looming concern that the aging population could burden government budgets.

The trust funds on which Social Security relies to pay benefits have been running low. The Social Security Administration has projected that funds could run out in 2035.


Due to outreach efforts, research, and due diligence, more insureds realize that their life insurance policy shares the same characteristics as private property. According to the Life Insurance Settlement Association, it is estimated that U.S. seniors have over $3 trillion of life insurance policies. Furthermore, Life Insurance Settlement Association 2015 survey results found that Americans aged 65 and older give up about $112 billion in life insurance benefits each year, either by surrendering their policies or simply letting them lapse, resulting in the policies being terminated.

Instead of lapsing, senior insureds might consider selling their no longer needed policies in exchange for an immediate lump-sum cash payment that is generally greater than the policy’s cash surrender value.

With more insureds realizing the potential value of their policy, this will soon lead to increased transactions in the life insurance secondary market and, in turn, growth of the life settlement aka Mortality-Linked Contract industry. Global investment management firm Conning and Co has revealed that over $30 billion of life settlement policies are in force today.

For sophisticated investors, this will lead to more opportunities in the tertiary market as well. Presently, the life settlement tertiary market records over $10 billion in transactions annually, according to a Conning and Co report.

Below are some additional points on how these changing demographics, economic, and retirement trends will affect the Life Settlement Industry.


Overall, the consequence of an aging population, global pandemic, the upsurge in the number of retiring baby boomers, and the impact on governmental benefits will lead to life settlements being a lucrative investment opportunity. Sophisticated investors are more interested and gearing up to learn more about this alternative asset class.

Skip to content