Life Settlement Regulation Update

[lifesettlementadvisor]

2009 was a big year of Life Settlement Regulations.

Currently, 39 states regulate life settlements.

banning STOLI in the state and prohibiting policy owners from entering into a life settlement for 2 years after a policy is issued

Illinois: imposes disclosure requirements and licensing and ethics standards on viatical and life settlement providers

Minnesota: imposes restrictions on selling policies within 4 years after purchase. It also modified existing statutes regulating settlements.

Nevada:seek to eliminate STOLI, which limit the ability of policyholders to sell policies within 5 years after they have purchased the policies

New York: passed life settlement bill. The law establishes disclosure requirements, privacy protections and rescission rights.

North Dakota: seek to eliminate STOLI, which limit the ability of policyholders to sell policies within 5 years after they have purchased the policies.

Rhode Island: passed life settlement bill which will be effective 7/1/2010 and requires brokers to disclose compensation and other information to policy owners

Vermont: seek to eliminate STOLI, which both limit the ability of policyholders to sell policies within 5 years after they have purchased the policies.

Washington: requires that life insurers notify insureds age 60 and up who are seriously or terminally ill that they have alternatives to giving up or cashing in their policy. It also specifies that life insurance policy owners may not enter a settlement agreement within 2 years of receiving their policy and requires that policies settled within 5 years of issuance be reported to the state Office of the Insurance Commissioner.

West Virginia: seek to eliminate STOLI, which limit the ability of policyholders to sell policies within 5 years after they have purchased the policies.

 

[Mark]

Life settlement companies are just too picky on what they are looking for. By the time, I use to bring them someone, they didnt want them.

I'm done doing life settlements. Most companies are just too picky on what they will take and it takes too long to do one.

 

[insuranceexec]

Life settlements are stil a viable option providing that the agent has a good understanding of LE's and UW.

Thanks for the update.

 

[lifesettlementadvisor]

Life settlement companies are just too picky on what they are looking for. By the time, I use to bring them someone, they didnt want them.

I'm done doing life settlements. Most companies are just too picky on what they will take and it takes too long to do one.

The life settlement industry has evolved quite a bit since its inception. It has become a buyers market. In the early days, buyers did not fully understand all aspects and LE's were not accurate. Now that it has become a more sophisticated industry, the parameters for purchase are much more narrow. You should not be done with it, just understand what they are looking for and when you come across a good fit, work on that. Most agents only do 1 or 2 life settlements a year.

General Parameters for most buyers:
70 yrs old or older
LE under 160 months
Total Premium to LE 50% or less.

You should be able to guesstimate if a client falls under these three criteria before spending the time and money on it.

Also understand the process timeline is lengthly, but important. When starting it can take 6 weeks to get medical records from your clients doctors and then another week to get the LE's. Once that is done, a broker will spend it out to multiple buyers. Each buyer (who receives a large amount of files on a daily basis) uses pricing software, inwhich they basically have to type in all the data from an illustration. Thats alot of premium, account value, and cash surrender value inputs! Once that is done than the broker negotiates for your client which can take a few more weeks, playing the buyers off one another. Once a bid is finally accepted than all the closing process starts. It is long, but beneficial for clients that can make a profit from unwanted life policies.

 

[dgoldenz]

We just went through one with someone who was a total decline with every company for a new life insurance policy. The settlement companies insisted that the LE was more than 15 years. The person completed a settlement about three years ago when they were younger and healthier. I know they revised the LE's recently, but give me a break....

 

[lifesettlementadvisor]

We just went through one with someone who was a total decline with every company for a new life insurance policy. The settlement companies insisted that the LE was more than 15 years. The person completed a settlement about three years ago when they were younger and healthier. I know they revised the LE's recently, but give me a break....

The LE's changed in 9/2008. With the change, the actuaries added at least 24 months to each LE. This puts the new LEs in line with the 2008 VBT tables.

When funds do their pricing, they do either LE+2 or LE+1 to add a safety net for their investors.

 

[dgoldenz]

The LE's changed in 9/2008. With the change, the actuaries added at least 24 months to each LE. This puts the new LEs in line with the 2008 VBT tables.

When funds do their pricing, they do either LE+2 or LE+1 to add a safety net for their investors.

I know they changed, but someone who is a total decline with all life insurance companies does not have a life expectancy of 15+ years at age 70. If they did, someone would have offered coverage.

 

[lifesettlementadvisor]

I know they changed, but someone who is a total decline with all life insurance companies does not have a life expectancy of 15+ years at age 70. If they did, someone would have offered coverage.

Did you ask to see the LE's?
If you like, I can run your case through pricing software so that you can see what type of IRR your client's policy would give an investor.

Maybe you worked with a bad broker? If so I could also recommend a very good broker for you to try.

 

[SettleIt]

This is a cool post. I'm just getting into life settlements, and you guys are letting me know what types of things to look for. I've heard it's lucrative, but if the regulation makes things better for the customer, I'm all for it!

 

[lifesettlementadvisor]

what company are you with?