YOU ASK:

What is the definition of Secondary Market?

WE ANSWER:

A Secondary Market refers to a market that trades securities and other products that have been previously issued and remain outstanding.

A secondary market can also refer to the place where life insurance policyowners can sell existing policies for amounts that are higher than its cash surrender value.

For instance, John is considering terminating his life insurance policy. He can surrender the policy to the insurance company and get the surrender value, he can stop paying premiums and wait for the policy to lapse, or he can sell it to a secondary market. A life settlement company may be willing to buy the life insurance policy (sales prices may go for up to three times the cash surrender value). The life settlement becomes John beneficiary and will receive the death benefits when John dies.

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