L Bonds Information at A Glance

The secondary market purchase of life insurance contracts was financed by the L bond, a high-yielding financial instrument. L bonds are a sort of privately issued alternative investment that was developed by Dallas-based financial services company GWG Holdings. On April 16, 2021, the company stopped marketing L bonds. The L bond, also known as the GWG l bonds, was a particular high-yield bond developed and issued by GWG Holdings (GWGH) between 2012 and 2021.

How L Bonds Operate
When a policyholder dies, their beneficiaries are safeguarded by life insurance. In the insurance secondary market, an insured party with a life insurance contract may also sell the policy.

After the deal is completed, the investor who bought the life insurance policy becomes the beneficiary and is in charge of paying the insurance company’s premiums; upon the death of the original policyholder, the buyer receives the insurer’s payout.

In a method known as a viatical settlement, investors in life settlements purchase life insurance policies. By matching their predicted returns with the seller’s expected lifespan, these investors hope to generate a profit. The investor earns a bigger return should the seller pass away before the anticipated time period because premium payments are no longer made. The majority of investors in these life insurance assets are institutions.

In the case of L bonds, the issuer used the money to buy life insurance contracts that were listed on the secondary market, frequently as a result of a life insurance settlement, and took on the obligation to pay the premiums related to those contracts.

L bonds were occasionally used by investors to finance the initial purchases and related premium payments for life insurance policies. In terms of life insurance settlement transactions, the funds obtained from the sale of the L bond were utilized to pay the requisite premiums to the life insurance policy’s seller.

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