Secondary life insurance markets are growing rapidly. Fromnearly no transactions

in 1980, a wide variety of similar products in this market has developed,

including viatical settlements, accelerated death benefits, and life

settlements and as the population ages, these markets will become increasingly

popular. Eight state governments, in a bid to guarantee sellers a "fair"

price, have passed regulations setting a price floor on secondary life insurance

market transactions, and more are considering doing the same. Using

data from a unique random sample of HIV+ patients, we estimate welfare

losses from transactions prevented by binding price floors in the viatical

settlements market (an important segment of the secondary life insurance

market). We find that price floors bind on HIV patients with greater than

4 years of life expectancy. Furthermore, HIV patients from states with price

floors are significantly less likely to viaticate than similarly healthy HIV patients from other states. If price floors were adopted nationwide, they would

rule out transactions worth $119 million per year. We find that the magnitude

of welfare loss from these blocked transactions would be highest for

consumers who are relatively poor, have weak bequest motives, and have a

high rate of time preference.