Top two takeaways from the LISA Fall Conference

Opinion

On November 7 through 9, LISA, the Life Insurance Settlement Association, held its annual fall meeting in Orlando. Many topics of interest to life insurance producers, life settlement brokers, and life settlement investors were covered, but two key items stood out.

I.     The biggest obstacle facing the life settlement industry today is the lack of consumer awareness. 

Each day, elderly policyholders, ignorant of the option of a life settlement, are surrendering policies that might bring them significantly more value as a life settlement. Although a relatively new financial option, knowledge of life settlements has not filtered through to consumers the way you would expect. Producers, who traditionally look out for their clients’ best interests (and their own wallets, too) should be happy to spread the word. Yet many find themselves afraid to even mention life settlements to their clients as a result of rules handed down by their primary company or broker-dealer. That’s the bad news.

There is good news, however. Regulators are becoming aware of how senior citizens are being shortchanged by these practices and have passed or are considering legislation or regulation that would mandate the disclosure of the life settlement option to a policyholder considering the lapse or surrender of a policy. Disclosure has already been mandated in six states — Kentucky, Maine, New Hampshire, Oregon, Washington and Wisconsin — with more on the way.

Additionally, the legal profession is becoming aware of this malfeasance as well. Lawyers are starting to initiate lawsuits against producers who have failed to disclose the life settlement option to their customers and insurance companies that are uncooperative with policyholders who are trying to settle their policies.

The life settlement industry is trying to educate consumers of this valuable option through awareness campaigns and by supporting legislation intended to apprise consumers of their right to investigate the life settlement value of a policy about to be lapsed or surrendered.

II.   Investment money continues to find its way back into the industry.

It is no secret that in the past few years, the combination of a poor economy and changes to life expectancy methodology drastically decreased the amount of investment money making its way into life settlements. Since bottoming out about four years ago, investor interest has slowly, but steadily, increased, with the realization that life settlement investments offer the potential for very attractive returns in this low interest rate environment and are relatively uncorrelated to the stock market.

See also: Should Your Clients Wait to Sell?

Interestingly, pension plans have shown the greatest increase in interest in investing in life settlements. Their long-term view, combined with the attractive uncorrelated returns, make life settlements a good fit. Even more interesting are reports that some insurance companies are quietly investing in life settlements not only to reap good returns, but also to hedge against the mortality risks inherent in their life insurance business.

There’s no doubt that once a decision has been made to lapse or surrender a policy, investigating the option of a life settlement can only be a good thing for the policyholder. As we’ve said before, if it was your grandparent, parent, etc., and the choice was to surrender a policy for $91,120 or to settle it for $330,000 (a recent case that we did), what would you want for them?

Overall, as always, attendees of the LISA conference were well rewarded with an informative meeting. LISA's spring meeting will be held May 21-23 in Las Vegas.

 

For more from Robin S. Weinberger and Peter N. Katz see:

Before You Suggest a Life Settlement

What Does Betty White Know About Life Settlements?

Now’s the Time to Introduce Life Settlements to Accountants

About the Author
Robin S. Weinberger and Peter N. Katz

Robin S. Weinberger and Peter N. Katz

Robin S. Weinberger, CLU, ChFC, CLTC, has specialized in life settlement brokerage services since 2003 and is currently the director of national accounts for Life Insurance Settlements Inc. She has spent her whole career in the life insurance industry. Highlights included general agent and director of national accounts for Connecticut Mutual and vice president of marketing for Sun Life of Canada. Robin is also an active personal producer. She can be reached at RSW220@aol.com or (617) 451-3343.

Peter N. Katz, J.D., CLU, ChFC, is a life settlement broker and co-director of national accounts with Life Insurance Settlements Inc. In addition, he is a consultant specializing in life insurance advanced sales illustrations. Peter has spent more than 30 years in the life insurance and financial services industry as an advanced markets attorney and in product development. He can be reached at pkatzlife@yahoo.com or (860) 673-3642.

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