The life settlement industry began in the late 1980s in response to the large number of AIDS patients that were coping with the catastrophic costs of a terminal illness. Many had life insurance policies that were limited or inaccessible before the death of the insured. A creative solution was offered to AIDS patients: a lump-sum payment greater than the policy's cash-surrender value in exchange for transferring the ownership and beneficiary of the policy. 

The idea of a life insurance policy as a financial asset that could be transferred for a cash payment had taken hold and a new industry was born. The life settlement industry's basic premise - the consumer has a right to sell unwanted or unneeded life insurance - has been validated by the spectacular growth of the U.S. market. This growth is mainly driven by the large numbers of baby boomers that are becoming senior citizens. Baby boomers are constantly changing their estate-planning needs. More important, they are beginning to realize that these insurance policies can be sold on a secondary market as financial instruments.