The secondary market for life insurance policies typically marches to the beat of its own drum.
From an investment perspective, the large-scale marketplace is not correlated to the stock market.
And the consumer marketplace, most of the time, has little to do with the overall economy.
Offers are computed based on the appraised value of the policy, and external economic factors rarely come into play.
However, the dramatic increase in interest rates is expected to affect policy offers by the end of the year.
The Past
Over the past 20 years, we have only seen one central economic scenario dramatically changing the life settlement market: the 2007-2009 Great Recession.
Many providers relied on institutional lines of credit, using borrowed money to purchase policies.
Interest rate fluctuations were rarely an issue.
During the recession, institutions did not raise rates, instead opting to pull lines of credit completely.
The institutions, like investment banks and hedge funds, didn't make money more expensive; they instead removed the ability for providers to access credit at all.
And for a short time, the life settlement market, like other parts of the economy, collapsed.
Many companies folded, and the whole industry was turned on its head.
The Present
I don't believe the situation is that bleak today, but we see some interesting changes due to rising interest rates.
Now, we are seeing very competitive appraisal prices while also hearing from our inside sources that appraisal values will soon drop due to rising interest rates and increasing costs of funds.
As the cost of money goes up, offers will go down.
Right now, and before the end of the year, we're expecting bids to remain flat: We are not expecting any significant fluctuations for any current and accepted deals.
Most companies that purchase life insurance policies in the secondary market have some remaining "dry powder" funds borrowed at lower rates.
Again, they must have commitments to purchase specific policies on the books by year-end.
Implications for Clients
Agents and advisors with lukewarm clients who have not been motivated need to know that it's best to appraise a policy now and lock in an offer.
Wm. Scott Page is the CEO of 
