The life settlements market is often introduced through its investment characteristics, illiquidity, long duration, and the promise of low correlation to traditional assets. Yaniv Bertele tends to start somewhere else: regulation and consumer protection. In his view, the asset class becomes institutionally allocatable only when policyholder outcomes, market conduct, and documentation integrity are treated as non-negotiable infrastructure rather than “nice-to-have” safeguards.
“If you want serious capital in longevity finance, you have to earn trust twice,” Bertele says. “First with the policyholder through transparency and fair process and then with the allocator, through controls and verification.”
That framing matters because life settlements still carry misconceptions. The most persistent is the idea that the asset class is ethically ambiguous because returns are linked to mortality. Yaniv Bertele argues the debate is usually misplaced. “The misconception is that life settlements are ‘mortality-based incentives,’” he says. “But mortality assumptions are embedded in mainstream finance pensions, annuities, and life insurance itself. The real question is whether the market is regulated, whether consumers are protected, and whether the transaction is conducted transparently.”
A regulatory map larger than many investors assume
Despite the perception of life settlements as a lightly governed niche, the U.S. market operates primarily under state insurance regulation, and most Americans live in jurisdictions with comprehensive statutes.
Today, 43 U.S. states plus Puerto Rico regulate life settlements, covering roughly 90% of the U.S. population. Those statutes are not uniform, but they share a common architectural licensing, disclosures, prohibited practices, and enforcement authority built from model frameworks developed by the National Conference of Insurance Legislators (NCOIL) and the National Association of Insurance Commissioners (NAIC).
Bertele sees the lack of perfect uniformity as a feature of the landscape, not a reason to dismiss it. “Operating across jurisdictions forces discipline,” he says. “It’s operationally complex, but it also raises the standard. Institutions should want managers who can demonstrate compliance at scale.”
What consumer protection looks like when it’s taken seriously
In Bertele’s telling, the market’s legitimacy rests on whether a policyholder is protected from poor information, conflicted incentives, and predatory process design. The prevailing statutes address those risks through several recurring mechanisms.
Licensing is the first gate. States typically require life settlement providers and brokers to be licensed and subject to oversight by state insurance departments creating a baseline screen against unqualified or bad actors. Disclosures are the second layer. Policyholders are commonly provided information about alternatives (such as maintaining coverage, loans, or accelerated benefits where available), potential consequences (including taxes and government benefits impacts), and the economics of the transaction, including compensation and conflicts.
Rescission rights add another protection. Many states provide a “cooling-off” window allowing a policyholder to unwind a transaction within a defined period after execution; the exact number of days varies by jurisdiction. Yaniv Bertele views these provisions as practical signals of regulatory maturity. “Cooling-off rights, disclosure requirements, licensing these are not theoretical controls,” he says. “They’re designed to reduce pressure tactics and information asymmetry at the moment it matters most: when the consumer is deciding.”
Enforcement completes the loop. State regulators generally have examination authority, can investigate complaints, and can impose sanctions, including license actions and penalties. For institutional investors, Bertele argues, the existence of enforcement power is less important than a manager’s ability to show how their compliance program operates day-to-day. “Institutional diligence isn’t satisfied by ‘we comply,’” he says. “It’s satisfied by evidence policies, audits, exception reporting, and a culture that treats consumer outcomes as part of investment risk.”
Drawing a bright line: legitimate settlements versus STOLI
No topic is more important to institutional comfort than STOLIstranger-originated life insurance schemes where policies are initiated primarily for resale rather than genuine protection needs. STOLI can introduce litigation risk, carrier challenges, rescission exposure, and reputational damage. Modern life settlement statutes typically include anti-STOLI provisions, waiting-period concepts, and prohibitions intended to prevent policies from being originated as de facto investment instruments.
“Clean paper matters,” Bertele says. “The market works when policyholders are making an informed decision about a policy they legitimately own and no longer need. When you cross into STOLI dynamics, you undermine consumer protection and create unacceptable risk for investors.”
This is also where the “consumer protection” conversation becomes inseparable from investment quality. If a manager cannot demonstrate sourcing discipline and documentation integrity, projected returns are irrelevant because the asset itself may not be durable.
Putting “mortality-based investing” in historical context
Bertele’s response to the ethical critique is not dismissive; it is contextual. He points out that modern finance has always been intertwined with mortality assumptions. Life insurers price against death timing. Annuities invert the equation and price longevity. Pensions rely on actuarial tables. Even public systems calibrate contributions and benefits based on expected lifespans.
The legal foundation for policy transferability is also long-standing. The U.S. Supreme Court’s Grigsby v. Russell (1911) decision is frequently cited as a cornerstone precedent supporting the assignability of life insurance policies as property, even when the assignee lacks an insurable interest at the time of transfer, provided the policy was validly issued.
“The ethical question becomes clearer when you acknowledge what the law and financial history already recognize,” Yaniv Bertele says. “Life insurance is property. A secondary market can be legitimate when it’s regulated, transparent, and aligned with consumer benefit.”
Consumer benefit is not a talking point it is part of institutional legitimacy
One of the most practical arguments for life settlements is that they can offer policyholders an option beyond surrendering a policy back to the carrier or letting it lapse. That consumer-utility angle is increasingly visible in public guidance. AARP, for example, has published materials that recognize life settlements as a real option while also warning caregivers and families to understand the process, provide the necessary documents, and protect against bad actors. AARP’s policy positions also emphasize that states should regulate life settlements and related “living benefits” so consumers receive clear disclosure and fair treatment.
Bertele argues that this is not merely reputational; it is structural. “If policyholders consistently receive better outcomes through fair bidding and clear disclosures, the market becomes more credible,” he says. “And credibility is what draws long-term institutional capital.”
Governance and privacy: the operational burden that serious managers embrace
Regulation is only one side of institutional comfort; operational behavior is the other. Life settlements require handling sensitive medical information, and that creates an unusually high bar for privacy controls.
Bertele is explicit that medical data governance must be engineered rather than improvised. “In longevity finance, privacy is operational risk,” he says. “If you can’t prove how you protect records, control access, and maintain audit trails, you don’t have an institutional program.”
HIPAA compliance and de-identification standards are part of that foundation. The U.S. Department of Health and Human Services (HHS) describes two recognized approaches for HIPAA de-identificationSafe Harbor and Expert Determinationand provides guidance on how organizations should think about de-identification under the Privacy Rule.
In Bertele’s view, these safeguards are also what allow technology to improve the market responsibly. “The point of modern underwriting is not just better prediction,” he says. “It’s reproducibility, auditability, and governance so the asset class can be underwritten by investment committees, not just specialists.”
Why this regulatory story matters to institutional investors
For allocators, regulatory frameworks are not a background detail; they are part of the investment thesis. A manager’s ability to operate across state regimes, maintain licensing, document disclosures, prevent STOLI exposure, and demonstrate privacy controls is directly tied to portfolio durability.
Bertele sees the due-diligence conversation shifting accordingly. “The question is no longer ‘are life settlements legal?’” he says. “The question is ‘is the manager’s compliance and consumer protection program institutional-grade and can they prove it?’”
As life settlements mature from specialist niche to broader institutional sleeve, Bertele believes the winners will be the firms that treat regulation and consumer protection as competitive advantages. “Markets don’t become scalable because they’re exciting,” he says. “They become scalable because they’re trustworthy.”
