Life of Industry

What is a life Settlement ?

A life settlement is a financial transaction in which a policy owner possessing an unneeded or unwanted life insurance policy sells the policy to a third party for more than the cash value offered by the life insurance company. The purchaser becomes the new beneficiary of the policy at maturation and is responsible for all subsequent premium payments. a Life Settlement is a modern version of the "Viager", (without the real estate risk) or of the "Tontine", invented by Lorenzo Tonti in France under Louis XIV.


Lorenzo de Tonti (1602-1684) was governor of Gaeta in Italy and Napolitan Banker who invented the Tontine The basic concept consisting that each investor pays a sum into the Tontine. The funds are invested and each investor receives dividends as each investor dies, his or her share is divided amongst the surviving investors. This process continues until only one investor survives. Originally, the last surviving subscriber received only the dividends: the capital reverted to the state upon his or her death and was used to fund public works projects, which often contained the word "tontine" in their name. In a later variation, the capital would devolve upon the last survivor.