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Archive for June, 2008

Life settlement brokers

Monday, June 9th, 2008

Life settlement brokers Posted June 9th, 2008 by Admin Guy Filed Under: Misc If any of the policy holders of Whole Life insurance settlement would like to surrender his life insurance policy and have the life settlements then he would be entitled to receive the entire cash value of the life insurance policy and in addition to that he would be able to borrow money against the cash value which he has received with the life insurance policy totally at a reasonable rate. There are many life s

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Difference between the old and the new methods

Monday, June 9th, 2008

In the past years, if a person has signed up for any life insurance policy and would in turn would like to end the life insurance policy they would approach the life insurance company and surrender the life insurance policy for a low value and would definitely end up in a loss in money at least to a little extent. But there is a new option in the industry that is the Whole Life insurance settlement, which would help the customer to sell the life insurance policy to a third party person for a

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Tips to Getting Life Insurance

Sunday, June 8th, 2008

Tips to Getting Life Insurance Posted by Categories: Insurance If you need life insurance you should determine how much insurance is appropriate and the type of life insurance policy that would best meet your family’s needs. Do we have a life insurance policy equal to the value of the business, simple, investment grade life insurance? Your life insurance quote will be less once you’ve got one year smoke free under your belt. I had a renewed sense of self-confidence and hope for my health,

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Senior Life Insurance-The Money Crunch

Friday, June 6th, 2008

It always comes down to available capital for investments, doesn’t it? Whether the funds are coming from an individual, small bank, hedge fund, pension fund, well, just about anywhere, everyone seems to be licking their collective financial wounds. The senior life insurance industry is no different. The credit crunch, which saw the toppling of many a company, including the venerable Bear Stearns, has taken its toll on almost everyone, and the life settlements market is no different. Seems as

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Money Crunch

Friday, June 6th, 2008

It always comes down to available capital for investments, doesn’t it? Whether the funds are coming from an individual, small bank, hedge fund, pension fund, well, just about anywhere, everyone seems to be licking their collective financial wounds. The senior life insurance industry is no different. The credit crunch, which saw the toppling of many a company, including the venerable Bear Stearns, has taken its toll on almost everyone, and the life settlements market is no different. Seems as

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Settlements and the rich: my two cents

Thursday, June 5th, 2008

Let’s just say it: The well-to-do do not always stay well-to-do, especially at the older ages. That means that the well-to-do may not only want, but need, life settlement options.
 
Granted, it’s hard for a lot of people to drum up sympathy for people who seem always to have had the best of life’s opportunities and offerings. Some people, upon learning of a wealthy person’s financial downfall, actually hail the news with a “he-got-what’s-coming-to-him” sneer. Such a reaction no doubt reflects spite or reverse-envy, but it does not foster creation of a financial solution that will buttress that person or the larger community that may be called on to supply benefits.
 
For financial advisors, a better response would be to explore whether that elder has unwanted or underperforming life policies that could be sold to help out. That would be far better than sitting by and letting the once-well-off drown in financial squalor for the rest of their lives.
 
What brings this to mind is a June 4, 2008 report from The Associated Press, saying that Ed McMahon, Johnny Carson’s sidekick on The Tonight Show, is fighting to avoid foreclosure on his multimillion-dollar home in Beverly Hills, Calif. No one is saying that McMahon is at the edge–he has assets–but the story is a clear example of the fact that the rich are not immune to economic upheaval.
 
It is also a reminder of reports about other wealthy individuals who did in fact end up on hard times–living in one-room apartments, with not a penny to their names. These reports are rare, but they do show up and when they do, one always wonders if this couldn’t have been averted.
 
Certainly, a decade or so ago, advisors could not suggest selling a life policy as a way to avoid financial ruin, because such transactions were virtually unheard of.
 
But today, the financial toolbox does have settlements, and financial advisors do have access to brokers and markets to help make such transactions work. So, it behooves today’s advisors to dig into that toolbox to see if one of the markets can be of assistance.
 
Consider this: An article in this issue of Settlement Watch reports on a new study which has found that the wealthy could lose 20%-40% of their total wealth in retirement due to shocks to government benefits and adjustments to home equity. This study was released by Barclays Global Investors N.A., San Francisco (See the article here.) It is unlikely that a 20%-40% loss, though substantial, will put a wealthy person under water, particularly if the person has many years to until retirement. But the risk of ruin increases if the individual is in, or approaching, old age.
 
The question to bring forward is this: Why limit the available solutions list to selling fine art collections, exquisite jewelry, securities, and the 2nd and/or 1st home? Why not put life settlements onto the menu, too?
 
If the older contract is no longer needed or wanted, a well-structured life settlement could be a much less drastic response to a once-wealthy senior’s financial distress, and it could allow that person to maintain dignity while reordering lifestyle and finances.
 
[ Want to weigh in? Just blog your comments below. ]
 
–Linda Koco, Managing Editor, e-Publications
National Underwriter Life & Health
 

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Three Things Everyone Should Know About Life Settlements

Thursday, June 5th, 2008

Life settlements have a variety of great benefits for many policyholders, however, the fine print and complicated rules can make the entire process a stressful experience. With some basic information and proficient, expert help, it does not have to be that way. To make the entire process a successful venture, there are three things that every policy-owner should know. Life Settlements VS Viatical Settlements Although these two terms seem identical at first glance, there is a significant diffe

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Ask the expert: what to say about the new proposed laws

Thursday, June 5th, 2008

The question was: A lot of clients are not aware of proposals in my state for a new life settlement law and/or curbs on stranger-originated life insurance. My clients just want to “do something” with their old, under performing life policies. In view of that, should I discuss the new proposals with such clients when presenting the life settlement solution?
 
The answer is: I really think it depends on where the policyowner resides and whether or not the new proposals have become law in that state.
 
In my opinion, the new proposals weren’t put in place to eliminate people from selling an old, under performing life policy. Rather, they were put there to prevent people from putting into force a life policy through an unapproved program that some believes falls under this "vague" definition of stranger-originated life insurance.
 
Bottom line, it’s the financial advisor’s responsibility to provide the best option for the client when it comes to choices on what to do with this often overlooked asset. A free non-binding appraisal is certainly a must for any client who is past the age of 70 years old, especially when the client can no longer afford, or simply no longer wants, to pay the premiums.
Rob Haynie
Managing Director
Life Insurance Settlements, Inc.
Fort Lauderdale, Florida
rob@lisettlements.com
www.lisettlements.com

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Quiz question: which state is getting criticized?

Wednesday, June 4th, 2008

The question was: which state’s swiftly passed law has been harshly criticized by the life settlement industry, particularly for including language setting criminal penalties for even unintentional involvement in stranger-originated life insurance?

a)  Indiana
b)  Iowa
c)  Florida
d)  West Virginia

The answer is: d, West Virginia. At a Life Insurance Settlement Association meeting in Washington, D.C., LISA executive director Doug Head pointed out that LISA was “assured” that a West Virginia bill would not be put forth. But, as it turned out, the legislature enacted stern legislation at the last moment. This legislation includes what Head said are “awful” penalties for those involved with STOLI, including criminal penalties that could extend to the policyholders themselves as well as the investors. click here for entire article 

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Feature: how long do life settlement transactions take to complete?

Wednesday, June 4th, 2008

By Matt Brady
 
One of the inescapable facts of life settlements is that they take longer than anyone involved wants. But, according to speakers at the recent Life Insurance Settlements Association conference in Washington, D.C., there may not be much anyone can do about it.
 
“Certain steps have to be done,” such as the underwriting and evaluating of a policy, noted Scott Kirby, co-president of business development and compliance issues for Orlando-based Advanced Settlements LLC.
 
But there are things an advisor can do to minimize the time a settlement process takes, he added. Providing a complete file and application to a life settlement broker is an example. If documents are missing, or even if they are just not current enough, “that slows the process down.”
 
There are a few reasons why files come in with incomplete or old data, he said. One is that “people want to travel down the path of least resistance” and try to get the settlement done with as little paperwork as possible. “It takes them a while to understand that we need as much information as possible,” he said.
 
Incomplete information can’t be fully evaluated by providers. According to Bryan Freeman, president of Habersham Funding, LLC in Atlanta, and one of the catches is that, as more and more pieces of information come in, they can trigger as many questions as they answer. “As they piecemeal that information to you, you see something you’ve never seen before and you have to ask about that,” he said.
 
David Hartman, chief operating officer of Baltimore-based Life Settlement Providers, LLC, said that, given the small percentage of life settlements that actually go through to completion, his company may simply remove many incomplete cases from consideration. “It slows our willingness” to look at applications if they are lacking in any way, he explained.
 
Hartman discounted the idea that technology could greatly improve the process, noting there is a lack of established standards for much of the data upon which life settlement providers. “Unfortunately, there’s no data standard for a policy illustration, for an application,” or for a Health Insurance Portability and availability Act release form, he noted.
 
There’s an element of “humanness” that can affect how long a settlement takes, too, Hartman pointed out. One aspect of that element, which often proves troublesome, is the insured, and what the insured does, or does not do, with the policy while the settlement process is ongoing.
Some insureds, noted Hartman, stop paying premiums before the closing, which can have a significant effect given that a policy illustration makes assumptions about payments being made.
“I don’t think it’s deliberate,” Kirby said. “A lot of it comes down to that last payment that’s due. They try to time it.”
 
Freeman was a bit more ambivalent on the issue. He said there are insureds who try to get out from under a policy having paid as little as possible, but they are ignorant of what the implications of missing a premium can be. “I think it’s deliberate that they don’t pay it,” he said, “but it’s not deliberate in that they don’t know how it affects things.”
Kirby, however, argued that some of the blame also falls on life settlement providers. For instance, the providers have a general system of dealing with the first agent to bring in a completed policy; this causes many brokers to rush and just get as much as they have on hand, he said. “The quicker I try to ship things, there’s a higher likelihood I’m going to have incomplete information” when trying to beat the competition.
Some of these time-related issues have also changed the way the industry works. Take life expectancy reports, for example. There’s little a broker or provider can do to speed a life expectancy evaluation, so Kirby noted that many brokers, himself included, have begun the process of obtaining an LE report on their own even before dealing with a provider.
 
“We’re getting pressure from the customer to get pricing as soon as possible,” Kirby said. This creates significant pressure for brokers, who may find themselves obtaining, and paying for, LE reports for cases that don’t ultimately end up going through. “The industry throws a lot of garbage at us, and some of it sells,” he commented. A large brokerage could, he estimated, spend as much as $500,000 to $1 million annually on LE reports. “It’s an expense that I guess is just part of doing business.”
 
Some providers have sought to speed the process by doing their own underwriting, but Jennifer Fleming, director of closing and funding for Atlanta-based BAC Structured Life Group LLC, said that a provider’s clients may want more assurance by using a more well known service. “You can do your own underwriting in house, but at the end of the day, you’re at the mercy of your funders,” she said. “They’re going to want a name.”
Fleming also touched on the human aspect in noting that insureds, at some point after the bidding, can become a bit unsure about someone else owning their life insurance. “Once you’ve gone through this two-month process and won the case, then you have to go and explain who you are and why this is a good thing for them,” she said.
 
Another area where the inconsistency of the settlement industry can be seen is the bidding process itself. Hartman said, “if you have not gotten a bid from a provider and a funder within two weeks, that provider does not want your business.”
 
Freeman disputed that, however, saying that different business models in the provider industry mean that some companies will take longer to get a bid out. “That’s the most inefficient aspect of this business,” he said of the funder/provider relationship for many companies including his own. A waiting period of two or three months for a bid “happens all the time,” he added.
 
Given the relatively young age of the industry, many finders are new to the business themselves, pointed out Kirby, indicating that this means that an education process between providers and their funders sometimes also has to take place.
 
Freeman also offered some advice based on his past experience as a broker, specifically with regards to paying the expectations game and giving insured a realistic idea for the insured of how long the process will take and what the result is likely to be.
 
“If you set pie in the sky expectations,” he said, “you’re going to get pie in the sky results.”
 
 

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