The tertiary life settlement market is where investors trade already-acquired life settlement policies among themselves — both as individual policies and in bulk portfolios. It's distinct from the secondary market, which is where original policyholders sell to initial investors through licensed providers. Industry sources indicate that tertiary trading volume now substantially exceeds secondary market volume, reflecting a more mature and liquid market with better price discovery. Three transaction types dominate: bankruptcy-driven auctions (public, often with 30–40 bidders), block portfolio sales (managed, competitive bidding), and bilateral private deals (negotiated, confidential). For individual accredited investors, direct participation in the tertiary market is limited, but understanding it is relevant because it affects the pricing and availability of policies in the secondary market where most individual investors transact.
When I explain the life settlement market to investors, the question that often comes up next is some version of "so where does all this trading happen?" The honest answer is that what most people think of as "the life settlement market" is actually only half of it. There's a primary origination flow — seniors selling policies to investors through licensed providers — and then there's a parallel tertiary market where existing investors trade policies among themselves, in individual deals and in large portfolio blocks. The tertiary market is where most of the real trading volume in life settlement investments actually happens today, and understanding it changes how you think about entry points, pricing, and liquidity in the asset class overall.
The three-stage structure of the life settlement market
Before getting into the tertiary market specifically, it helps to see the whole structure laid out. The life settlement market has a natural three-stage flow: policies originate with the insurance carrier, they enter the secondary market when the original owner sells, and they can then be traded repeatedly in the tertiary market as investors reposition portfolios, wind down funds, or redeploy capital.
Primary market
Policyholder purchases life insurance directly from the carrier. No settlement activity.
Secondary market
Original policyholder sells to an investor via licensed provider. One-time transaction.
Tertiary market
Investors trade already-settled policies. Individual deals and portfolio blocks. Repeatable.
A single policy can touch all three stages. It starts as a standard life insurance contract between an individual and a carrier. Years later, the policyholder decides to sell it through a licensed provider — that's the secondary market transaction. The initial investor may hold it to maturity, or they may sell it later to another investor — that's the tertiary market. A single policy can change hands multiple times in the tertiary market over its remaining life before eventually maturing and paying out to whichever investor owns it at that point.
Secondary vs tertiary — the key differences
The two markets share an underlying asset, but they function very differently from a participant, pricing, and transparency perspective. Understanding these differences is what lets you read the market signals correctly.
| Dimension | Secondary market | Tertiary market |
|---|---|---|
| Who sells | Original policyholder (typically senior 65+) | Existing investor, fund, or portfolio holder |
| Who buys | Licensed provider, or investor via provider | Other investors, funds, institutional buyers |
| Regulation | State insurance department licensing required | Private transactions between existing owners |
| Deal size | Single policies, typically $100K–$10M face | Individual or block portfolios ($10M–$500M+ face) |
| Transparency | Data reported to state regulators annually | Largely private, little public data available |
| Price discovery | Provider-mediated, case-by-case | Competitive bidding in many transactions |
| Liquidity | Transaction-by-transaction, slow | Block trading, faster for institutional size |
The most important practical difference is transparency. Secondary market activity is reported annually to state insurance departments and aggregated in industry publications like The Life Settlement Report. Tertiary market activity is largely private — investment managers are not under obligation to disclose tertiary trades publicly, so most transactions happen out of public view. That's why industry estimates of tertiary volume are based on anecdotal data rather than hard numbers. The observation that tertiary volume exceeds secondary volume is well-supported by industry participants but not publicly documented in the way secondary volume is.
The three tertiary transaction types
Not all tertiary transactions work the same way. Depending on why the seller is selling and what they're selling, the process can range from a highly public auction with dozens of bidders to a private bilateral deal between two parties. Each type has different dynamics around pricing, disclosure, and deal complexity.
Bankruptcy auctions
Fund or investor liquidation forces a public sale. The administrator publishes the sale, any qualified bidder can participate, and bids are typically binding by the second round.
Block portfolio sales
Fund wind-downs, portfolio rebalancing, or strategic exits driven by a fund manager or portfolio holder. Conducted through investment bank advisors with invited bidders.
Bilateral trades
Two parties — typically known to each other in the industry — negotiate a direct sale without public marketing. Common for individual policies or small bundles.
Pricing varies significantly across these transaction types. Bankruptcy auctions often produce the deepest discounts because the selling party has little negotiating leverage and the sale timeline is set by the administrator, not the seller. Managed block sales produce pricing closer to fundamental value because the process is competitive but not distressed. Bilateral private trades can go either direction depending on the relationship — a seller who needs to dispose of a single policy quickly may accept a below-market bid from a trusted counterparty, while a strategic trade between two mature funds may price close to or above standard market levels.
Individual investors buy in the secondary market
HYV's marketplace gives accredited investors access to individual vetted policies sourced through licensed provider partners — the same secondary market channel where seasoned institutional investors also source their initial positions.
Browse ListingsWhy tertiary volume now exceeds secondary
The fact that tertiary trading volume exceeds secondary market volume is a relatively recent development in the life settlement asset class. Twenty years ago, the tertiary market barely existed — most secondary market buyers held policies to maturity, and there was no meaningful trading between investors. Today, the ratio has flipped. Several factors drove this shift.
- Growth of institutional participation. When institutional capital entered the asset class, it brought institutional behavior — portfolio rebalancing, fund wind-downs, strategic exits, liquidity management. These activities generate trading volume that simply didn't exist when the market was dominated by smaller individual investors holding to maturity.
- Fund structure maturation. Closed-end life settlement funds launched in the 2000s have reached the end of their planned fund lives and need to liquidate remaining portfolios. Open-end funds need to manage redemptions through secondary sales. Both dynamics produce ongoing tertiary market supply.
- Post-GFC restructuring. The 2008 financial crisis triggered forced selling of life settlement assets, which initially looked like a crisis for the industry. In hindsight, it developed the liquid trading infrastructure that now makes the tertiary market the larger of the two.
- Information standardization. Policies traded in the tertiary market come with years of servicing history, known premium schedules, and verifiable ownership chain. That standardization makes them easier to price and transact than fresh secondary market policies where some due diligence has to start from scratch.
- Number of policies outstanding. Each year, the secondary market adds new policies, but existing policies continue to exist and trade. The cumulative stock of traded-and-still-active policies far exceeds the annual flow of new secondary transactions.
Annual face value of policies transacted in the secondary market in 2023, with approximately 3,400 policies acquired by investors. Industry research from Conning projects secondary market growth to approximately $5.5B in face value by 2033, against a gross addressable market of $200B+ in eligible policy supply. Tertiary market volume is estimated to materially exceed this secondary figure but is not publicly reported. Reference: Resonanz Capital institutional research.
What institutional participation means for pricing
The maturation of the tertiary market has meaningfully changed the pricing dynamics of the whole asset class — including the secondary market where individual investors participate. This is worth understanding even if you have no intention of participating in tertiary transactions directly.
Tertiary pricing creates a reference point for secondary pricing
When institutional investors are bidding actively for policies in the tertiary market at particular IRR levels, that sets a floor for what makes sense to pay in the secondary market. If an institutional investor can buy a seasoned policy in the tertiary market at a 10% projected IRR, they're not going to pay a premium for a comparable secondary market policy unless it offers better economics. This transmission mechanism keeps secondary and tertiary pricing in reasonable alignment — they're not independent markets.
Premium pricing in tertiary has compressed secondary yields
Historically, tertiary market policies traded at discounts to secondary market policies because the tertiary market was less developed and less liquid. That relationship has reversed in recent years. Institutional capital with mandates to deploy quickly has often bid tertiary portfolios at premium pricing — lower IRRs than the underlying policies would generate in the secondary market — because the diversification and operational efficiency of buying a seasoned portfolio in bulk outweighs the yield compression. This premium has flowed back into secondary market pricing, compressing yields there as well.
Evaluate individual policies on the HYV marketplace
HYV's platform gives accredited investors transparent access to individual vetted policies in the secondary market, with full documentation to support proper pricing analysis against current market benchmarks.
What this means for individual investors
Individual accredited investors are generally participants in the secondary market, not the tertiary market directly. Institutional trades in the tertiary market typically involve capital commitments in the tens or hundreds of millions — outside the range of most individual investors' life settlement allocations. But tertiary market dynamics still affect what individual investors experience in several direct ways.
- Secondary market pricing reflects tertiary market demand. When institutional tertiary buying is aggressive, it compresses secondary yields too. Individual investors entering the market need to be honest about whether current pricing still meets their return objectives — the 12–15% IRRs that characterized earlier market cycles may not always be available in current market conditions.
- Policy supply is constrained by institutional demand. Attractive policies don't sit on platforms for long. Institutional buyers with ready capital and standing underwriting teams can move quickly. Individual investors need to have their accredited verification, capital, and due diligence process ready to move when an attractive policy appears.
- Fund structures are a way to access tertiary-style diversification. For individual investors who want the diversification benefits of a large seasoned portfolio, life settlement fund structures are a reasonable path — the fund participates in the tertiary market at institutional scale on behalf of its investors, including individual accredited investors who could not practically access those opportunities directly.
- Exit pathways exist but are not easy. If an individual investor later wants to exit a life settlement position before maturity, selling into the tertiary market is theoretically possible but practically hard for single policies. Most individual direct owners plan to hold to maturity. If early exit becomes necessary, working through a specialized broker who has access to tertiary market buyers is generally the path, and pricing is typically at a meaningful discount to theoretical value.
- Understanding the full market improves secondary decisions. The investor who only understands the secondary market sees pricing in isolation. The investor who understands the whole market — how tertiary demand drives secondary pricing, how fund wind-downs create supply, how institutional behavior sets yield floors — makes better individual-policy decisions because they can read the market context those policies trade in.
Public industry research on tertiary market activity is limited because most transactions are private. Institutional research from Resonanz Capital covers the structural maturation of the market. The European Life Settlement Association publishes ongoing analysis relevant to European-domiciled funds active in the tertiary market. Industry trade publications including Life Risk News cover institutional transaction activity where disclosed. For general alternative investment market structure, SEC alternative fund bulletins provide helpful context on how tertiary markets typically develop in non-public asset classes.
Access secondary market policies on the HYV marketplace
Direct access to individual vetted policies through licensed provider partners. The same secondary market channel where institutional investors source their initial positions before trading them later in the tertiary market.
Frequently asked questions
What's the basic difference between the secondary and tertiary life settlement markets?
The secondary market is where original policyholders — typically seniors 65+ — sell their life insurance policies to investors for the first time, facilitated by state-licensed life settlement providers. The tertiary market is where existing investors trade those already-settled policies among themselves, either individually or in bulk portfolios. A single policy enters the secondary market once (when its original owner sells), but it can change hands repeatedly in the tertiary market over its remaining life before eventually maturing. The secondary market is where the asset class "originates" from an investor perspective; the tertiary market is where it "trades."
Is the tertiary market really bigger than the secondary market?
Yes, according to industry sources. Anecdotal evidence and participant observation indicate that total U.S. dollar volume of tertiary market transactions substantially exceeds secondary market volume. The reason is structural: each year the secondary market adds a flow of new policies, but the cumulative stock of already-settled policies in investor hands continues to trade. With hundreds of billions in face value already in the system, plus ongoing fund wind-downs and portfolio rebalancing, the tertiary market generates more transaction volume than new originations. Precise figures are difficult to verify because tertiary transactions are largely private and not subject to public disclosure requirements the way secondary transactions are.
Can individual investors participate in the tertiary market directly?
Generally, direct tertiary market participation is limited to institutional-scale investors because typical transactions involve capital commitments in the tens or hundreds of millions of dollars. Individual accredited investors usually participate in the secondary market (buying individual vetted policies through a platform) or access tertiary-style diversification indirectly through life settlement fund structures. Small-scale bilateral tertiary trades between individual investors do occur but require specific relationships and access that most individual investors don't have. Fund investing and secondary market direct ownership are the two practical pathways for individual investors who want exposure to the asset class.
How do institutional investors decide between buying in the secondary market vs tertiary market?
Most institutional asset managers buy in both markets as part of a unified portfolio strategy. Secondary market acquisitions give them control over policy-level underwriting and fresh LE reports. Tertiary market block purchases give them rapid portfolio scale, seasoned policies with verifiable servicing history, and operational efficiency. The two channels serve different purposes — secondary for targeted acquisitions matching specific portfolio gaps, tertiary for scale and diversification. Most large asset managers actively participate in both depending on what their current portfolio needs and what current market pricing makes economical.
Can I sell my life settlement policy later in the tertiary market if I need liquidity?
In theory, yes — an individual policyholder can sell a previously acquired life settlement to another investor through a specialized broker with access to tertiary market buyers. In practice, this is an illiquid and costly process. Single policies are harder to place than seasoned portfolios because buyers prefer scale. Pricing is typically at a meaningful discount to theoretical fair value, reflecting both the illiquidity premium and the transaction costs involved. Most direct owners of individual life settlement policies plan to hold to maturity rather than attempt early exit. If you might need liquidity from the capital committed, life settlements are probably not the right asset allocation for that portion of your portfolio.
Does the tertiary market affect pricing of policies I'm considering buying today?
Yes, and this is worth understanding. Institutional investors active in the tertiary market effectively set a yield floor for the whole asset class. If a given IRR is available on seasoned policies in tertiary portfolio trades, institutional buyers won't pay a premium for comparable secondary market policies unless the secondary policies offer better economics. This keeps secondary and tertiary pricing in general alignment. Aggressive institutional tertiary buying tends to compress yields across both markets. When evaluating any specific policy in the secondary market, it's worth calibrating against what yields are currently available at the institutional tertiary level — not as a precise comparison, but as a reasonableness check.
What triggers most tertiary market transactions?
Several recurring dynamics drive tertiary supply: closed-end fund wind-downs at the end of their fund life; open-end funds meeting investor redemption requests or rebalancing portfolios; strategic exits by market participants leaving the asset class; bankruptcy-driven forced sales by administrators; and active trading strategies where investors warehouse policies for repositioning. Each driver produces different pricing dynamics — forced sales tend to discount below fundamental value, while strategic rebalancing trades can price at or near market. Understanding which driver is behind any specific tertiary transaction gives you important context for interpreting the prices being paid.
