Life settlements are a useful financial tool for people who hold life insurance policies and would like to cash them out before their intended expiration date (which, ghastly enough, would be their death), and get more than they would if they simply surrendered the policy back to the issuer. Those policy holders might want to cash these policies in early for a number of reasons: to get some quick cash, perhaps to invest some in the market, or for medical costs.
In any case, the brokers who help effectuate these transactions are known as life settlement brokers. They essentially look for life insurance policyholders who want to cash out their policies, and match them with life settlement "providers." Providers are those professionals who have investors desiring to use life settlements as a financial investment tool. Essentially, those investors are betting that the former policyholders are likely to die before the maturation of the policy, thus making a profit.
Lately, there have been a number of cases in which criminal activity has been alleged against life settlement providers. One life settlement provider is being held on $1M in bail for allegedly running a "Ponzi" scheme involving life settlements.
