Life Settlements Laid Out
February 21, 2007 by Administrator

If you’re a senior with life insurance, you may have heard some pitches lately encouraging you to sell your policy in a transaction known as a “life settlement” or a “senior settlement.” Here’s a few things you should know about this relatively new idea.

Most importantly: Proceed with caution. NASD, the private-sector securities industry regulator, recently warned that the life settlement industry has been expanding rapidly, and competition among providers has become increasingly intense. That has generated some aggressive sales tactics and abusive practices. Be on the lookout, too, for high transaction fees.

Normally, if you have a life insurance policy you no longer want or need, you could surrender the policy for the cash value or allow it to lapse. A life settlement provides a third option. Life Insurance Settlements allow you, the policyholder, to sell your life insurance to a third party and often collect more than you would if you canceled the policy before it matured or before you died.

This idea is a variation on viatical settlements, which allow the terminally ill to sell their life insurance policies for living expenses. Life settlements, in contrast, aim toward older policyholders who are not terminally ill but have a life expectancy between two and roughly 10 years.

In a life settlement, you get a lump-sum payment that depends on your age, health, and policy, among other factors. The institution that buys your policy pays any necessary premiums, holds the policy until maturity, and collects the benefit after your death. In some cases, the institution resells your policy to other investors.

You might be considering such a sale if your insurance or your financial situation has changed significantly. Maybe you can’t afford the insurance, you need more money for living or health expenses, or you’re in danger of letting the policy lapse.

If that’s the case, life settlements aren’t your only option. You might be able to exchange your policy. You’ll need to look carefully at the tax consequences of that maneuver. Your policy might also permit accelerated death benefits, which allow some people with long-term illness to get benefits before dying.

If you think taking a life settlement might be the best move for you, NASD warns that you should be aware of some possible unintended consequences.

If you sell your policy, it will still be in effect. That might complicate things if you’re planning to replace your old life insurance with a new policy. You may also end up paying higher premiums if your health has changed. Make sure you know exactly how a life settlement could affect you if you know you will still need life insurance.

A cash payment from a life settlement would also change your income significantly for the year. That will have an effect on your personal finances and any situation in which your income determines your eligibility for something, be it a federal program or a specific tax benefit. Investigate these secondary effects before making the leap.

You’ll also need to shop diligently. The life settlement marketplace is quite new.

Source: Fool

Call 1-888-973-8377 to speak with a Life Settlement Professional.Â

NASD issues Life Settlement Warning
February 20, 2007 by Administrator

Everyone could use a little more money, but needing that cash desperately and in a hurry leads to a lot of mistakes.

The typical mistakes involve payday-advance loans, tax-refund anticipation loans, and more,but one big concern for senior citizens in need of cash is the “life settlement.”

NASD issued an “investor alert” this month warning about the potential dangers in trading a life insurance policy for cash.

Life settlements – sometimes called “senior settlements” – are a logical extension of a product that became popular in the 1990s, the “viatical settlement.”

In a viatical deal, the person giving up the insurance policy typically is ill and has a short life expectancy; he or she is taking a lump sum now and giving up insurance coverage because the end of life probably is within two years and he or she needs the cash to ease the time remaining.

Life settlements are similar, but they are targeted at folks who are not terminally ill, just old enough so that their life expectancies generally would fall in the 2-to-10-year range.

The life-settlement provider may hold the policy it buys until maturity (the death of the seller of the policy) or it may sell part or all of the policy to other investors, as varied as hedge funds and other insurance companies.

The consumer’s lump-sum payment depends on a number of factors, including age, health, and the terms of the insurance policy being sold. Premiums to keep the policy in effect are paid by the purchaser, who gets the death benefit in the end.

“For some seniors, there are not a lot of places to turn if they need cash,” said Ed Long, executive director of Healthcare and Elder Law Programs Corp. “But this is an idea that is sold to somebody, not something they tend to come up with on their own, and the real juice here is for the people buying the policy, not the person selling it.”

Getting the cash now, instead of leaving it to your estate, is not always a bad idea, particularly if there’s a strong current need for the money. But NASD officials point out that, even for people who perceive a need, the life settlement works for just a small percentage of the population.

“It might work if you have an immediate need for cash, if you are getting more from the settlement than you’d get in the policy’s surrender value, if you can’t borrow against the policy you are selling, you haven’t got other sources of cash, and you’ve got a hard-core need for the money right now,” said Elissa Walter, senior executive vice president for NASD. “It’s being sold to a lot of people who don’t really fit that kind of description.”

Most industry estimates of the market for life settlements in the $5 billion to $6 billion range, but some studies – and a number of firms that have entered the business – suggest that the potential market could be 20 times larger.

The issues that the NASD wanted to provide help with include:

Costs: Commissions on these deals can run as high as 30 percent. If the ultimate payoff is less than the surrender value of the policy, the consumer should just give up the policy for the surrender money.

Figuring out a fair value for the policy: A licensed life-settlement broker can present multiple offers, but experts suggest that most consumers take the first deal they are offered.

Tax implications: For some people, the lump-sum payment is taxable. In addition, that payment can cut into some people’s ability to participate in certain state or federal public assistance programs, most notably Medicaid.

Continued insurance needs: Sometimes, the consumer is selling one policy but using the proceeds to buy another.

But because the first policy remains in force, it could affect the consumer’s ability to get new coverage. And given that the person trying to buy the policy has a relatively short life expectancy, the coverage available is likely to be pricey.

Charles Jaffe is a senior columnist for Marketwatch

Call 1-888-973-8377 today, for a FREE Life Settlement Consultation.

Life Settlement Fund Launches in Australia
February 12, 2007 by Administrator

By Alex Dunnin

A wholesale fund that enables investors to gain exposure to life insurance policy settlements is now available in Australia.

The fund works like a fixed interest investment as the portfolio managers trade life
settlements on the secondary market where the policies are sold at a discount to
each policy’s face value.

Chris Renouf, fund manager of the Life Settlements Wholesale Fund, said, “It’s taken
us two years to get our story out there and for investors to understand the fund’s
potential.”

Renouf said the investments are uncorrelated with other sectors and therefore offer
diversification advantages.

According to Renouf, the fund is already available on several platforms, including
BT, Macquarie and Oasis. Interest in the fund is also strong in New Zealand, he
said.

The Life Settlements Wholesale Fund grew from $10 million to $86 million during 2006
reflecting strong interest in the niche new subsector, returning 9 per cent in the
six months between July and December.

Renouf said super funds in Australia are starting to take notice of this new asset
class and already account for one-quarter of the fund’s inflows.

Life settlements are essentially a secondary market for life insurance policies
issued by insurance companies in the USA and they are considered a time-valued
investment and a humanitarian investment, he said.

In the US life settlement investing is growing at 20 per cent annually.

Source: The Financial Standard Australia

More Life Settlement Fund Information:
Life Settlement Questions
Life Settlements Today
Life Insurance Settlements

Life Insurance Finance Association Expands
February 7, 2007 by Administrator

Life Insurance Finance Association Expands Membership to Insurance Producers

ATLANTA–(BUSINESS WIRE)–The Life Insurance Finance Association (LIFA) board of
directors voted today to open its membership to insurance producers, agents and
financial advisors.

Under the revised dues structure, professionals involved in the sale of life insurance and who act as advisors to consumers who purchase life insurance are invited to join the growing membership of the association.

“The future of the life insurance premium finance industry directly impacts the
careers of these professionals,” said Scott Cipinko, executive director, LIFA. “The
voices of these professionals need to be heard. Without them, we cannot properly
discuss the role and future of this industry. Life insurance premium finance is a
vital tool for financial and estate planning. Those involved in assisting and
advising consumers on such an important purchase must have this tool available to
them.”

Cipinko, who holds a life insurance producer’s license in a number of states, added
that the best way to ensure this tool is available to the consumer is to bring the
professionals that utilize life insurance premium finance into the discussions
directly and not through third parties or intermediaries, most of whom have never
sold a life insurance policy.

“It is time for the producers, agents and professional advisors to speak directly to
these issues,” said Cipinko.

In addition, LIFA will soon be announcing enhanced membership benefits, including
conference discounts, seminars and a series of conference calls exclusive to
members. For more information about LIFA membership or upcoming events, contact
Cipinko at scipinko@lifaorg.org or visit the LIFA Web site at www.lifaorg.org.

The Life Insurance Finance Association is a nonprofit, professional trade
association and its members are comprised of individuals and companies involved in
the life insurance premium finance industry. LIFA was founded to provide an open
dialogue between and among life insurers, premium finance lenders, life insurance
agents, brokers and insurance regulators, to provide consumer advocacy, and to
foster a better understanding among participants in the life insurance and premium
finance marketplace, state and federal policy makers, and the general public. For
additional information, visit www.lifaorg.org.

Life Settlement Seller Rights
February 7, 2007 by Administrator

Meir Eliav Focuses on Sellers Rights at Life Settlement Symposium

NEW YORK–(BUSINESS WIRE)–Focusing on the value of life settlements, Legacy Benefits president Meir Eliav joined life insurance expert Dr. Barry Kaye and a panel of distinguished experts at a recent symposium on consumer financial opportunities in the secondary life market at Florida Atlantic University in Boca Raton. The symposium was sponsored by Dr. Kaye, a strong proponent of life settlements, and the University.

As an industry expert selected to participate in this first-ever educational forum, Eliav drew on his background as a pioneer in the field. He spoke about seller’s rights in today’s evolving marketplace, noting that consumers in a wide range of life situations can benefit from the sale of unwanted or unneeded life insurance policies.

Dr. Kaye commented that life settlements are the most significant development in the
life insurance industry in years, citing numerous examples of how this growing
investment instrument can help achieve personal financial objectives. As a panelist representing the life settlement industry, Mr. Eliav noted, “Sellers are entitled to complete transparency, and more safeguards are in place than ever before to ensure they are treated fairly.” He urged consumers to work with companies that are members of the Life Insurance Settlement Association (LISA), the major trade association in the field that upholds a strong standard of business practices.

Pointing out that market characteristics have changed rapidly during the past few
years, Eliav said that today life settlements are financed primarily by large reputable institutions that aggregate significant volumes of policies covering many lives. “This puts sellers in a better position than in years past when the market was driven by private investors and involved smaller policy pools,” he said.

In 2004, Legacy Benefits helped broaden the appeal of life settlements investing by
originating the first ever portfolio of life settlement assets for a rated securitization transaction. The deal was rated by Moody’s Investor Services and underwritten by Merrill Lynch.

The symposium provided an overview of life settlements, expert advice on how to maximize benefits realized through the sale of policies and examples of individuals
who successfully used life settlements to provide for charities and heirs in addition to personal financial betterment. It also included focus group sessions for charities.

In closing, Dr. Kaye promised to provide the public with more educational forums on
insurance related issues.

About Legacy Benefits

A recognized leader in the life settlement industry, Legacy Benefits pioneered this
burgeoning specialty finance field more than 15 years ago and today maintains its
reputation as an industry innovator. Since 1991, Legacy Benefits has specialized in the origination, servicing and management of life insurance assets for a broad range of institutional clients. It utilizes an ever-evolving array of sophisticated analytical tools and upholds the highest ethical standards when evaluating and acquiring unwanted or nneeded insurance policies for its institutional clientele. Legacy Benefits was founded by company president Meir Eliav, a 30-year financial services veteran, who was a founding member and past-president of the Life Insurance Settlement Association (LISA), the largest U.S. trade association in the industry. In 2004, the innovative firm became the first ever to originate a portfolio of life settlement assets for a securitization transaction rated A1/Baa3 rating by Moody’s Investor Services. In 2006, Legacy Benefits received and reviewed life insurance policies covering 8,000 lives with a total face value of approximately U.S. $12 billion. Visit the company’s website at www.legacybenefits.com.