What is a secondary market for Variable Life Insurance?

A secondary market for variable life insurance refers to a marketplace where policyholders have the opportunity to sell their existing insurance policies to investors for cash. This alternative provides a financial option for individuals who may no longer need their policy or want immediate liquidity rather than surrendering it back to the insurance company, which typically results in a lower payout.

In this context, the importance of the secondary market is underscored by its role in enabling policyholders to realize the policy's cash value while also appealing to investors who may see value in acquiring these policies, especially if they believe that the underlying investments will perform favorably. This market differs from other insurance-related avenues, such as reinsurance or exchanges limited to standard life insurance, emphasizing its unique position in the financial services landscape.