www.lisassociation.org

On May 16th, the Life Insurance Settlement Association (LISA) successfully concluded its major bi-annual Spring Conference in Washington, D.C.

The 14th Annual Spring Conference focused on critical legislative, regulatory and financial issues in a variety of discussion-driven formats. Highlighted topics included new settlement law, funding, securitizations, taxation, and many others. Among the issues addressed, LISA targeted the increasingly contentious subject of stranger originated life insurance (STOLI). ‘LISA has long held that STOLI is a real threat to consumers in the market place and the Spring Conference allowed us to reinforce our position against this activity before members and non members alike’ explained Doug Head, LISA Executive Director. In keeping with its commitment to the welfare and protection of consumers’ rights, LISA presented the ‘Consumer freedom Award’ to Representative George J. Keiser of North Dakorta’s 47th District. Keiser, as Secretary of the National Conference of Insurance Legislators (NCOIL) and member of the NCOIL Life Insurance & Financial Planning Committee, has played an invaluable role in the legislative process to safeguard consumer’ rights in multiple new settlement laws.

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The amount of insurance an individual can buy usually exceeds the amount they need.

Many people overlook this important asset, which if managed effectively, could significantly boost their net worth. The emergence of a secondary market for life insurance is the driving force behind the ability to monetize your insurability.

Until the late 19680’s, life insurance companies were the only entities that repurchased their own policies. However the emergence of the AIDs epidemic spurred the capital markets to develop ways for patients to obtain cash from their life insurance policies while still alive, in order to pay their medical bills and other expenses. Because life insurance policies are typically assignable, policyholders are free to transfer ownership of their policies to third parties. The policy holders sold their policies to brokers called viatical companies who in turn sold them to investors. Policy holders are able to use the extra money to improve their quality of life in the final years while investors acquired a new asset class.

Life settlement companies determined the fair market value of the polices based upon the insured’s life expectancy and other factors such as the solvency of he underlying life insurance carrier and the rate of return required by investors. The life settlement companies pay the insured’s individual a percentage of the face value of the policy.

Some people find it unsettling to know that another party will benefit from their death. However, their concerns are unfounded. Life settlement companies do not know the name if the insured and the life settlement marker is not concerned about the life expectancy of any single individual. Investors base their decisions on the overall expected mortality of the general public. Policy holders can also take comfort from the fat the life insurance companies will not pay a claim if there is any foul play, or even suspected foul play by the beneficiary, Also life settlement companies are large established institutions that would not risk losing their entire business by participating in any illegal activities.

By Doug Head

The Life Insurance Settlement Association (LISA) has concluded its first life settlement compliance conference, a “Sold out” success. At this pioneer event, in Washington, DC, attendees learned from leading industry experts on the core challenges of compliance with state laws and regulations, while upholding the highest standards of business conduct and ethics in the life settlement industry.

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