Life settlements aren't exactly a new concept.

Also known as senior settlements, life settlements are contracts where a life insurance policyholder who is not terminally ill decides to sell his or her policy to an investor for a fraction of the face value. The investor then takes over the premium payments and gets the death benefit when the insured dies. Viatical settlements, on the other hand, occur when a life insurance policyholder becomes terminally ill and decides to sell the policy.

Coventry Financial's Chief Executive Officer and cofounder, Alan Buerger, says that a life settlement is an option that not many consumers know about.

That's why Buerger and Coventry Financial have formed the Life Settlement Coalition, a group that includes life settlement brokers and providers, and has the goal of educating consumers and insurance companies about life insurance settlements.

"I got into life insurance because I heard an agent talk about the legacy a good life insurance agent leaves behind businesses that stay open and families that can send their kids to college thanks to life insurance," says Buerger. "I think that the insurance industry should embrace life settlements because it makes life insurance policies more valuable and gives agents a better product to bring to their customers."

According to Buerger, surrendering a policy for the cash value, rather than seeking a life settlement, amounts to selling the policy back to the insurance company. Buerger says that the insurance industry would be well served by making consumers aware of options for the sale of a life insurance policy that is no longer wanted options that, under the right circumstances, can bring the policyholder more money than surrendering the policy.

"Over the last three years, Coventry has helped policysettlers receive more than $100 million in excess of the cash value surrender amount," says Buerger. "Generally, 20 to 25 percent of the policies submitted have a [settlement] value in excess of the surrender value."

"I think it serves consumers very poorly not to tell them about other options," says Buerger. "Consumers won't put up with it for long, and the insurance industry will get a black eye the same way it did with the 'vanishing premium' sales pitches."

The Life Settlement Coalition is developing sample "disclosure" forms that would make policyholders aware of life settlements that Buerger hopes will eventually accompany every policy surrender contract.