Filed Under:Annuities, Suitability

Life settlement rules of the road now clearer

Will the life settlement market rebound in 2011? Only time will tell. But increased focus on regulatory and self-regulatory oversight can only be a good thing. Case in point is the recent release of "Life Settlement Provider Best Practices" by the Institutional Life Markets Association. The document provides minimum compliance and diligence procedures for life settlement providers.

ILMA's release is "an important step toward standardizing life settlement origination practices," says ILMA managing director Jack Kelly. "Providers following the same, transparent procedures and diligence will protect consumers and investors while fostering confidence in this viable investment option."

ILMA's best practices document focuses on providers certifying the intermediary (broker, agent, financial advisor or attorney), guidance to providers on transferred policies, whether policy premiums have been financed, anti-fraud plans including retention of a medical professional or underwriter capable of comparing policy applications to medical records for material discrepancies, privacy policies, and direction on state and federal laws and regulations compliance.

As part of its guidelines, ILMA has included five supporting documents to be used by providers in their diligence. They are "Agreements of the Intermediary," an intermediary certificate, a detailed list of what a life settlement package should include, a closing interview script and additional policy diligence for a policy four years old or younger and worth $1 million or more.

"Life settlements are sophisticated transactions that ILMA recommends be handled by a financial professional with full disclosure of the fees and an understanding of the transaction," Kelly adds. "ILMA calls on providers to begin implementing our best practices as a critical component to the growth of this asset class."

The full version of ILMA's Life Settlement Provider Best
Practices is available at

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Nichole Morford

Nichole Morford
Managing Editor

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