Life Settlement News

Texans who invested with a Houston company accused of scamming state workers, retired teachers and others will get most of their money back.

Four-day Event Draws Cross-continental Interests in Secondary Market

As interest in the life settlement industry climbs, two major trade groups unveil plans to host an international trade mission in Europe. In 2010, the Life Insurance Settlement Association (LISA) and the European Life Settlement Association (ELSA) will convene the first-ever trade mission for life settlement professionals. The 2010 Life Settlement Trade Mission is scheduled to run from February 23rd to the 26th. The four-day mission opens in London with an overnight stop in Luxembourg and concludes in Zurich. Despite the lingering effects of a global economic crisis, the life settlement industry is experiencing renewed interest among financial professionals and lawmakers. A Life Settlement is the sale of an existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit. The market is commonly understood to be less correlated to the fluctuations of financial markets and therefore, highly attractive in difficult economic times.

New York’s state Legislature has passed a bill that would to regulate life settlements, requiring brokers and intermediaries to get their insurance licenses.

The life settlement market is now ten years old and the news is out! In recent months, the secondary market for life insurance has been the topic of articles and programs such as The New York Times, The Wall Street Journal, and ABC Nightly News among others. With this heightened awareness, consumers are reevaluating their financial choices and investors are taking a closer look at an increasingly attractive asset class.

Standard & Poor’s Ratings Services says that it sees inherent risks in securitizing life settlements and that it won’t be rating this type of investment any time soon.

Yesterday, World News Tonight (ABC) considered Life Settlements. Producers of the program found a physician consumer, Dr. Eddy Powell, who had happily sold his life insurance policy for far more than the value which the life insurer would have offered him at the time. Dr. Powell sold the policy for a value which required the buyer to pay the premiums for the rest of Dr. Powell’s (presumably long) life. In the ABC piece, Dr. Powell expressed regret for having sold the policy because, though the sale afforded him the ability to pay off his debts, he was no longer the owner of the policy. According to some experts, Dr. Powell appeared to have forgotten that, before considering the life settlement option, he faced two unsavory choices: sell his policy to the insurer for pennies on the dollar or allow it to lapse for a complete loss. The Life Insurance Settlement Association (LISA) encourages people who can hang onto their policies to do so, but for those who would otherwise lapse or surrender their policies, the settlement option should be considered wherever possible. The public needs to know that they have choices and that a life settlement is one of them.

With interest in the life insurance settlement industry at an all time high, industry founder Wm. Scott Page today warned of a “carpet-bagger” mentality that could be troublesome for the industry. Page, president and CEO of www.thelifeline.com, says that an increasing number of operators are rushing into the industry and promising unrealistic and untenable returns.

Massachusetts is reviewing DBRS Ltd.’s grades on investments tied to life insurance policies because they might be inflated like the discredited mortgage bonds at the center of the recession.

A recent article in Investment News warned companies of the dangers of not investing resources into their respective compliance departments. Failure to heed that warning could cost companies more in resulting fines than the cost of any immediate investments in the retention of and education for their compliance personnel.

The Life Insurance Settlement Association (LISA) invites all interested parties to a FREE webinar this Wednesday, August 26th, 2 p.m. (EDT), to experience the tools and resources available to current members on the LISA members-only website and see all that prospective members can look forward to as a full LISA member.