What Are Insurance Contract Allocations? A Primer for Financial Professionals

Insurance contracts represent a growing segment of the alternative investment landscape, combining actuarial science, financial innovation, and meaningful social benefit. For financial professionals, they provide a way to diversify portfolios with an allocation that is fundamentally independent from traditional markets such as equities, bonds, and real estate.

What Makes Insurance Contracts Distinct

The performance of these allocations is driven by actuarial timelines and contractual structures, rather than by macroeconomic cycles. This independence means that insurance contracts can provide:

• Non-Correlation – Performance is not linked to stock market movements, interest rates, or credit cycles.

• Transparency – The market has matured over two decades, with regulation now in place across more than 40 U.S. states, including strict licensing, disclosure, and consumer-protection requirements.

• Social Utility – Policyholders who no longer need coverage gain financial flexibility by accessing the fair value of their contracts, often funding healthcare, retirement, or estate planning needs.

  
  

An Established, Evolving Market

Since the early 2000s, the secondary market for insurance contracts has become increasingly institutionalized. Professional custodians, independent auditors, trustees, and valuation specialists now support the framework, ensuring governance and oversight at every level. This has transformed what was once a niche idea into a globally recognized allocation that advisors can approach with confidence.

The Role in Portfolios

Insurance contracts are not intended to replace traditional asset classes. Instead, they function as a complement — a steady, long-duration allocation that can enhance diversification and strengthen portfolio balance. For advisors serving clients with long-term horizons, they offer a distinct opportunity to align performance with responsibility.

Sources:

• Conning Market Outlook on Insurance-Contract Allocations: https://www.conning.com

• Life Insurance Settlement Association (LISA): https://www.lisa.org