The Effects of Life Settlement on the Primary Life Insurance Market: Theory and Evidence

寿险结算行业最近才出现，从20世纪90年代末的区区几十亿美元增长到2007年的约120亿至150亿美元，根据一些预测，预计未来十年将增长到超过1500亿美元。寿险交收是指寿险保单持有人以高于寿险公司所提供的现金退回价值的价格，将保单出售给第三者(寿险结算公司)的一种金融交易，从而由第三者购买人承担向寿险公司支付的所有后续保费，并在寿险保单到期时(即原投保人去世时)成为寿险保单的新受益人。寿险交收行业源于主要寿险市场的两个主要特征。第一个特点是，人寿保险的保费通常是前期负担的，即保费在早期超过精算公平保费，而在后期低于精算公平保费，特别是在投保人健康受损的情况下。第二个特点是，对于定期保险，人寿保险合同的现金退保价值(CSV)要么为零，要么处于较低的水平，与投保人的健康状况无关。由于目前寿险保单的精算值对于健康受损的个人来说要高得多，CSV不对健康状况做出反应的事实为健康受损的投保人和寿险结算公司之间的交易收益提供了机会。新兴的寿险二级市场引发了寿险公司和寿险结算行业之间的争议。人寿保险公司反对寿险和解。鉴于寿险市场在经济中的重要性，严格研究新兴的寿险结算对一级寿险市场的影响具有重要的理论和实证意义。这项研究有两个目标。首先，运用经济学理论分析了寿险二级市场对一级市场保险合同和消费者福利的影响。其次，他对一级寿险市场可能如何应对结算业威胁的理论预测进行了实证检验。最后，他使用这些测试的结果来最终校准模型，并量化生活安置业的福利效应。特别是，由于第一个问题的答案，特别是消费者福利问题，取决于投保人失误的原因，即是由于丧失遗产动机还是流动资金冲击，他还研究了投保人失误的原因。这项研究项目将为政府对寿险结算业进行更明智的监管提供知识。由于人寿保险是一种特殊类型的动态合约，因此这项研究也有可能从总体上揭示涉及动态合约的二级市场。

The life settlement industry is quite recent, growing from just a few billion dollars in late 1990s to about $12-$15 billion in 2007, and according to some projections, is expected to grow to more than $150 billion in the next decade. A life settlement is a financial transaction in which a life insurance policyholder sells the policy to a third party (a life settlement firm) for more than the cash surrender value offered by the life insurance company, thereby the third-party purchaser assumes responsibility for all subsequent premium payments to the life insurance company and becomes the new beneficiary of the life insurance policy at maturation (i.e., the time of the original policyholder's death).The life settlement industry results from two key features of the primary life insurance market. The first feature is that the premium for life insurance is typically front-loaded in the sense that the premium exceeds the actuarially fair premium in early years, while it is lower than the actuarially fair premium in latter years especially when the policyholder has impaired health. The second feature is that the cash surrender value (CSV) for life insurance contracts is either zero for Term insurance, or at a level that is low and does not depend on the health status of the policyholder. Because the present actuarial value of a life insurance policy is much higher for individuals with impaired health, the fact that the CSV does not respond to the health status provides an opening for the gains of trade between policyholders with impaired health and the life settlement companies.The emerging secondary market for life insurance has triggered controversies between life insurance companies and the life settlement industry. Life insurers are opposed to life settlements. Given the importance oflife insurance market in the economy, it is important to rigorously study, both theoretically and empirically, how the emerging life settlement may affect the primary life insurance market. This research has two goals. First, the researcher is using economic theory to analyze the effect of the secondary market for life insurance on primary market insurance contracts and on consumer welfare. Second, he conducts empirical tests of the theoretical predictions about how the primary life insurance market may respond to the threat from the settlement industry. Finally, he uses the results of these tests to ultimately calibrate the models and quantify the welfare effects of the life settlement industry. In particular, to the extent that the answer to the first question, particularly the consumer welfare question, depends on why policyholders lapse, i.e., whether it is due to loss of bequest motives or due to liquidity shocks, he also examines why policyholders lapse.The research project will provide the intellectual knowledge for more informed government regulation regarding the life settlement industry. Because life insurance is one special type of dynamic contracts, the research can also potentially shed light on the secondary market involving dynamic contracts in general.