TY - JOUR T1 - Risk Mitigation for Life Settlements JF - The Journal of Structured Finance SP - 55 LP - 60 DO - 10.3905/jsf.2006.644160 VL - 12 IS - 2 AU - Nemo Perera AU - Brian Reeves Y1 - 2006/07/31 UR - https://pm-research.com/content/12/2/55.abstract N2 - Investors seeking new structures for acquiring policies in the life settlement market encounter several underlying risks unique to the asset class. Those risks, described in this article, include contestability risk, missing body risk, insurable interest risk, incorrect-purchase-price risk, life insurance company credit risk, cost-of-insurance risk, and longevity risk. Some risks can be easily mitigated, but others require more complicated risk transfer mechanisms that combine financial products with insurance products. These products range from contestability coverage to more sophisticated mortality risk transfer constructs that blend equity derivative products with property casualty insurance. As the life settlement market evolves, risk mitigation will play an increasing role in reducing volatility and enabling predictable returns to allow for more institutional capital participation. Knowledge about the risks and the available risk mitigation solutions becomes a must for prospective investors interested in entering into the life settlement market.TOPICS: Other real assets, exchanges/markets/clearinghouses, credit risk management ER -