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Insurance and Financial Advisor
By: Bob Graham
A new policy statement from a life insurers’ group, suggesting that the securitization of life settlements needs to be regulated, has sparked a sharp response from a life settlement trade group.
The American Council of Life Insurers (ACLI), representing nearly 300 companies providing life insurance, recommended that the securitization of life settlements “be prohibited by legislation or regulation.”
National Underwriter Life and Health
By: Trevor Thomas
A life settlement think tank is defending the value of the life settlement securitization concept.
The American Council of Life Insurers, Washington, asked Feb. 3 for policymakers to ban the securitization of life insurance policies sold in the secondary market. Packaging pools of life settlement transactions to back securities encourages stranger-originated life insurance and other forms of fraud, the ACLI says.
The Wall Street Journal
By: Leslie Scism and Larry Light
2/6/2010
Death is inevitable, but good investment returns aren’t—especially those that rest on how long people live.
The increasingly popular practice of buying rights to older people’s life insurance is risky, even downright perilous. People are living longer than actuarial tables say they should, and that is a problem, at least for the investor. Adding to the danger are a recent adverse tax ruling and some scam artists on the edges of the industry.
Commentary by Life Policy Group:
It’s disappointing that even the ‘serious’ papers resort to gimmicky and misleading headlines like their counterparts in the tabloids.
American Chronicle
By: Amy Gavartin
ADVISERS ARE CONSTANTLY LOOKING FOR ways to supplement the depleted finances of their clients. For seniors, one option that has become more popular is the secondary market for life insurance or life settlements. Several articles have recently been published on this topic, and many have tried to portray this industry as the “next subprime crisis” waiting to happen but gloss over the underlying fact that the use of life settlements has uncovered vast amounts of hidden value from existing life insurance policies. Over the past 10 years, owners of life insurance policies who have chosen to sell have received approximately $6-7 billion more than their cash surrender value (CSV) (Thomas, “LISA Pans Article,” Life and Health Insurance News (September 14, 2009). It is not uncommon for the settlement amount to be three to five times the CSV, and the policy owner is relieved of all future premium payments on the policy. All types of policies are eligible for a life settlement, including term, universal life, whole life, variable universal, and second-to-die policies. The general rule of thumb in today’s market is that the insured should be over age 70 with a minimum of $250,000 of insurance.
Commentary by Life Policy Group:
An article which balances some of the more negative news stories about life settlements.
National Underwriter Life and Health
By: Trevor Thomas
Several life settlement organizations have reacted strongly to the American Council of Life Insurers’ recent statement calling for a ban on the securitization of life settlements.
“Once again. ACLI has chosen to mix apples and oranges when condemning the life settlement market,” said Jack Kelly, director of government affairs for the Institutional Life Markets Association, Washington. He was responding to a policy statement from the ACLI, Washington, holding that the securitizations of life insurance settlements should be prohibited by legislation and regulation.
Commentary by Life Policy Group:
It’s good to hear the comments of Jack Kelly. Let’s hope that there are more people in government affairs who will stand up and be counted.
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