Options for "Super Seniors"

Interesting article on the need for consumer awareness on life settlement options. Those over the age of sixty are the fastest growing segment of the U.S. population, with needs and expectations much greater than those of the prior generations. Clearly life settlements and other similarly focused services to provide for the expanding needs of today's "super seniors" are going to continue to be sought after by this subset U.S. consumers. Those companies that understand those needs, develop longevity data and tools to manage these unique risks, and have the vision to develop products for this expanding market will lead the charge.

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.

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.

by Robin S. Weinberger and Peter N. Katz, Life Health Pro journal, Nov. 26, 2012

Always do right. This will gratify some people and astonish the rest.

Mark Twain

 

Life Settlements-Consumers vs. Investors

Life Insurance Settlement Association (LISA) published it's weekly newsletter. I thought this was an interesting article!

Life Settlements: Weak Investor Supply Despite Growing Consumer Demand-11/15/2012

“The life settlement market volumes remained low in 2011, reflecting weak capital inflows continuing as in the past few years. This in part due to investor concerns with standards of underwriting and pricing accuracy,” said Scott Hawkins, analyst at Conning. “In fact, because of fewer new policies settled, we estimate that the amount of in-force life settlements actually declined for the first time in 2011 based on death claims and lapses on previously settled policies. While consumer demand for this product remains strong, the asset class has so far been unable to attract sufficient capital to meet that demand. Activity in the market has mainly centered on acquiring distressed portfolios rather than funding new policy purchases. But we may be seeing early signs of change”...READ MORE. Also see LifeHealthPro's article on the Conning report.

Wishing you all a Wonderful Thanksgiving Holiday!

Gratitude is not only the greatest of virtues, but the parent of all others.

Cicero (106 BC - 43 BC), 'Pro Plancio,' 54 B.C.

Interesting article on STOLI vs Life Settlements

I came across this article from Michael Kreiter of the Life Insurance Settlement Association on the clear distinction between a life settlement transaction vs. stranger owned life insurance (STOLI). There continues to be an ongoing "myth" in the life insurance industry that these transactions are the "same" and that perception could not be further from the truth. Those that support life settlement (and actively work in that market) have as much heartburn over STOLI as carriers do and do not want any part of those transactions-STOLI is bad for carriers, both the life and life settlement industries, and most importantly they are bad for the consumer.

     

Never hold discussions with the monkey when the organ grinder is in the room.

Sir Winston Churchill (1874 - 1965)

--Want to find STOLI? Ask the carriers!
The rhetoric, day in and day out, is always the same from insurance carriers…”all you have to do to find how much STOLI exists is ask the life settlement providers.” Time and time again, carriers and their trade organizations incessantly utter their bleat: STOLI/Life Settlements, STOLI/Life Settlements, STOLI/Life Settlements.

First and foremost, it is important to discern what IS – and IS NOT – STOLI before one can cast a stone. Stranger-originated life insurance is exactly what the term describes – life insurance originated by a stranger. These schemes are typically initiated by a third party looking to own and control a policy from its inception in violation of insurable interest laws.

Importantly, life insurance policies are not sold in a vacuum – there is a licensed insurance producer who has been appointed as an agent of the insurer. Carriers are responsible for performing underwriting and due diligence to seek out fraud and illegal activities in applications for new insurance.

A life settlement, on the other hand, is a lawful sale of a lawfully owned life insurance policy by a lawful owner. This transaction is highly regulated and transparent and, in all but a handful of states without settlement laws, is made to a licensed life settlement provider.

It would seem only natural when looking for STOLI to focus on circumstances surrounding the application and issuance of policies and NOT the sale of a lawfully owned policy. To find out how much STOLI exists, ask the insurers. Require them to report on how many policies they issued in violation of state anti-STOLI or insurable interest laws, or how often insurance companies issued policies where there was fraud or misrepresentations in the applications for the insurance.

Since STOLI involves the issuance of new policies in violation of state insurance laws, such an inquiry would also look at how many of the insurers’ appointed agents have been engaged in illegal activities and how many agents have been subject to termination, regulatory action or litigation for their involvement with STOLI.

And ask the insurers how many life settlement brokers and life settlement providers have been found by regulators or other law enforcement entities of illegally manufacturing policies. Of the more than 300 so-called lawsuits involving STOLI that the ACLI says are pending, how many are against life settlement companies? These are the questions that should be asked in an inquiry into STOLI.

Posted on August 29, 2012 by Michael Kreiter, Director of Legislative and Regulatory Affairs, LISA Written by: Michael Kreiter, Director of Legislative and Regulatory Affairs, LISA on August 29, 2012.

MIB-A Year in Review

Medical Information Bureau (MIB) just released Q4 and 2011 annual reports. Q4 proved to be a solid finish to a year that was stable across some age groups and quite active in others. To quote MIB directly, "The MIB Life Index showed marked resilience in 2011". Most age groups reflected an end of year increase in activity ( 45-59 year olds +0.1%, 60+ age groups +8.9% ). The only age group that reflected a slight downward trend was 0-44 (-2.2%). Application activity in total increased .2% compared to 2010 (which indicated that total activity for "individually underwritten life insurance applications fell 1.2%").

60+ age groups, continue their upward (YOY) trend (15.03% in 2010, 16.7% in 2011) which is consistent with development, and expanded, simplified issue programs along with a renewed carrier focus on middle market sales.

Age related distribution of activity noted 54.2% of all applications came from ages 0-44 (a slight drop from 2010 which reflected 55.6%); 29.1% ages 45-59 (unchanged from 2010); 16.7% 60+ age groups (increase from 15.3% in 2010).

Overall, these are encouraging year end results which , in this blogger's view, indicate some increased confidence on behalf of the consumers of insurance products. Certainly a more positive outlook than the prior years reports indicated!

As a tribute to a very young, but incredibly brilliant, young lady that recently succumbed to an untimely death, I wanted to take the opportunity to utilize one of her quotes-a wonderful reflection as we begin the new year;

"If you want to do something big in your life, you must remember that shyness is only the mind," she said. "If you think shy, you act shy. If you think confident you act confident. Therefore never let shyness conquer your mind."

Arfa Karim Randhawa, aged 10 (2005)

May all of my readers have a prosperous and blessed 2012!

Women and Increased Diabetic Risk from Statins

The LA times reported on a study just released from the Archives of Internal Medicine this week red-flagging increased risks related to statin (cholesterol lowering) therapies. The report indicates that post-menopausal women, taking statin therapy purely as "preventative" protection against development of heart disease in fact did not develop frank heart disease during the study period but developed a predecessor to heart disease, Type II diabetes!

Type II diabetes, known as "non insulin" or adult onset, is a lifelong chronic disease marked by increased levels of blood glucose. It is the most common form of diabetes, often a flagship risk factor associated with obesity. It is also a common predecessor to development of heart disease as it is more difficult to control blood pressure and cholesterol levels.

According to the study, over 153,000 post-menopausal women (aged 50-79) were studied and followed between 1993 and 2005. Statin usage was evaluated at baseline and year three. All women were encouraged to continue on therapy throughout the length of the study.

At the end of the study period, it was indicated that nearly 11,000. women had developed Type II diabetes. Increased incidences among women of Asian decent and those with normal BMI. The study indicated that further evaluation drilling down the statin drugs that were related with increased incidences would be a good next step.

As statins have become more prevalent, and often touted as the miracle drug of the century, it's reminders from important studies such as this that "one drug does not fit all".

"Wish not so much to live long as much as to live well"

Benjamin Franklin, Poor Richards Almanac, 1738

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