Institutional allocations towards the life settlement market, increased substantially last year. A handful of large pension managers invested sums of as much as $600 million (The State of Michigan) in the market, to try and take advantage of the attractive returns provided by the asset class.

A life settlement is the "legal" sale of an existing life insurance policy, and trading of these assets has been well established for some time. Traders aim to buy a policy for more than...

