Arbel Life LLC, - Company Blog

2009-11-07T17:02:00.000-05:00

How to leverage your insurability? - Life Settlement and Premium Finance

2008-08-19T13:01:00.002-04:00

New York, NY May 2008. Senior citizen becomes more and more educated when it comes to their retirement income.

With advance in medicine and technology, mortality tables have been change dramatically in recent years. At the bottom line, we live longer. For some of us, this is much longer than they expected. If 20 years ago a 65 years old retiree thought he’ll live till the age of 83 or so, now days he more likely to reach the age of 87 .

In some cases these senior citizens need more supplemental cash in order to maintain their standard of living. Since they do not want to liquidate any tangible assets they have.

Today, few financial tools can help these senior by leveraging their insurability.

In this article I’ll spread information about two ways seniors can tap into cash that in most cases they did not know they have.

The first method is Life Settlement or Senior Settlement where an old life insurance policy is being sold on the secondary market and leaves the insured with lump sum of cash. However, no insurance coverage is now protecting the senior. In order to qualify for a life settlement, the insured must posses a policy that is out of contestability and has a death benefit of minimum $250,000. However, some providers will buy a policy that is less than $250,000 , some other criteria has to do with the insured age (65 and above) ,life expectancy (2-12 years) , premium on the policy (less than 5% of death benefit) and cash surrender value not to be more than 30% of the death benefit.

If all parameters fit the buyer’s criteria, an average of 20% of the face value will be paid to the insured as a life settlement less any commission paid to the agent (Broker) who handles the case. Results may vary from case to case.

The second method is Life Insurance Premium Finance. Each and every one of us have hidden asset called insurability. Our insurability allows people to obtain life insurance up to their net worth which all we have minus what we owe. For example a 77 male who’s house worth $1,200,000 and has a vacation home that worth $500,000 plus some stock and pension may have a net worth of $2,000,000 to $2,500,000. What it means is that that person has insurability of $2,500,000 assume no life insurance is in force.

Using the premium program will allow the insured to obtain a loan to finance the premium on the policy. The insured will assign the policy as collateral for the loan plus a personal guarantee equal to 25% of the loan. After the loan is mature (usually 2-5 years)

The insured will have to decide what to do. At that point the insured will have few options:
The first is to pay the loan plus interest and assume full responsibility for future premium. 2^nd option will be to renew the loan for another period and to assign more personal guarantee. 3^rd option will be to sell the policy on the secondary market as a life settlement.

if choosing the life settlement option, the following numbers should be considered :
$2,500,000 life insurance policy on a 77 years old male will generate an annual premium of around $125,000 plus interest and fees .
After 2 years the total loan can reach the amount of $300,000. With a settlement offer of 20% of the face value the amount will be $500,000.
After paying the loan, the insured will remain with $200,000. Based on the deal structure the insured may have to pay a commission of up to $60,000 to the agent/broker who brokered the deal.

With the Premium Finance Program, if insured passes away during the loan period, the processed will cover the loan and the rest will go to the beneficiaries

in conclusion, senior citizen have some options when it comes to generating cash using their insurability via channels like carrier approved premium finance program and life settlement program , all designed to help them use their life insurance policy and their life insurance insurability

Boaz Arbel is the General Manager at Arbel Life, LLC, a New York based company that specializes in the high net worth senior market. To obtain further
Information about Life insurance Premium Finance, Life Settlement and to read additional articles about these subjects please visit the website:

www.arbellife.com you may also read all publications at http://1800pf.blogspot.com/

How to donate your Life Insurance Policy to Charity

2008-08-19T12:56:00.002-04:00

Life insurance can be a simple and flexible approach to make a significant contribution to your favorite charity

A Life insurance policy is an excellent tool for charitable giving. Not only does it allow you to make a substantial donation to charity at no cost to you, but you may also benefit from tax rules that apply to gifts of life insurance.

With the guidance and support of your favorite charity and the approval of your legal and/or tax advisors, along with the support of your family, you can create something very exclusive that is reserved for a select group of eligible individuals.

It can be a life insurance policy that has provided its original purpose, some examples are: a spouse who has past away and no longer needs it, a grown child who is financially independent or to protect a business that no longer exists. It can also be a new policy purchased specifically to benefit your favorite charity; a gift of life insurance can enable you to leave a much greater gift to your favorite charity than may have been possible during your lifetime.

There are at least four different ways in which you can structure a gift of life insurance to your favorite charity:

1. You can make your favorite charity a beneficiary of an existing life insurance policy. Upon your passing, the full face value amount of the policy will go to your favorite charity. Although the proceeds from the policy will be included in your gross estate, the full amount received by your favorite charity may be deductible as a charitable deduction. To make your favorite charity a beneficiary of an existing life insurance policy, you can simply request a beneficiary designation form from your employer or insurance company. Most forms require the following information:

· Your favorite charity full legal name:

· Your favorite charity permanent mailing address:

· Your favorite charity federal tax identification number:

· Your relationship to the beneficiary: Charity

2. You can make your favorite charity the owner and beneficiary of an existing paid-up life insurance policy. By doing so, you may be able to deduct an amount equal to the fair market value of the policy, or your cost basis, whichever is less. Since your favorite charity becomes the owner of the policy, the proceeds will not be included in your estate for tax purposes.

3. You can make your favorite charity the owner and beneficiary of a policy on which you are still paying premiums. You may be able to deduct an amount equal to the approximate cash value of the policy or the policy's cost basis, whichever is less, in the year in which you give the gift. You may also be able to deduct any future premium payments, and the proceeds will not be included in your estate for tax purposes.

4. You can purchase a new policy and make your favorite charity the owner and beneficiary. Because your favorite charity is the owner, you may be able to deduct premium payments as charitable contributions for as long as the premiums are paid, Subject to state limitations. In addition, the proceeds will not be included in your estate for tax purposes.

Life insurance is a flexible charitable giving tool that can be utilized to suit your individual financial needs while also substantially supporting your favorite charity’s programs.

If you are thinking about a donation of life insurance to a charity, I encourage you to consult with your legal advisor and/ or tax advisor to help you decide on the best approach for you. It is important to note that some states don’t consider a charity to have insurable interest in its donors lives.

Boaz Arbel is the General Manager at Arbel Life, LLC, a New York based company that specializes in the high net worth senior market. To obtain further information about Carrier Approved Life Insurance Premium Finance programs, Life Settlement and charitable giving and to read additional articles about these subjects please visit Arbe Life LLC, website at http://www.arbellife.com/

. You may also read all publications at http://1800pf.blogspot.com/

What is a Life Settlement? : By Boaz Arbel

2008-08-18T23:24:00.005-04:00

Life Insurance - Life Settlement

New York , NY 8-2008 - When I first looked into the life settlement industry back in 2003 it was something I was not familiar with and I research the field due to a person I know and brokered the sale of a large portfolio consisted 200 policies of viaticle cases. The person I know made a fortune off this one deal and today he is a very successful businessman who turned this one deal results to a one man business empire. As of now, he is not involved in this industry and mainly trusts me and my company to provide him with the right and most accurate updates about the industry and its regulations. Lately, he approached me in an unusual manner asking very specific questions about the industry. I was kind of surprised from the fact that a 34 year old self made millionaire with a net worth of more than
$25,000,000 shows such interest in my industry. Are coming back? I asked. “Yes” he answered.

The life Insurance Life Settlement Industry is growing very fast and each year more and more professionals understand the potential in this industry and offer their clients with the Life Settlement option.

What is a Life Settlement?
A life settlement is the sale of a life insurance policy for a large cash payment that is better than the policy’s cash surrender value,
A life settlement is defined as a financial transaction in which a policy owner holds an unwanted or not needed life insurance policy and sells the policy to a funder who represents a bank or large institutions.
The purchaser becomes the new owner and beneficiary of the policy and is responsible for all following premium payments.

Life Settlement or Life Settlements, also known as senior settlement
Is a concept that getting more and more popular among people who do not want continues paying the premiums for their unneeded / unwanted life insurance policy

Reasons for selling the policy
• Children are all grown up and doing well
• Need cash for retirement
• Eligible for better performing product
• Need funds for Investment
• Premium on policy become to be very expensive
• Change in your estate structure and worth
• Divorce or outlive the beneficiaries
• Need large amount of cash and do not want to liquidate assets and savings Want to give large amount of money for charity while alive
• Help beneficiaries before passing away.
• A company key person insurance policy is no longer needed
• The life insurance coverage is related to an obsolete buy/sell agreement

Recent articles, surveys and research show that this industry is yet to reach it full capacity and will grow tremendously in the next few years

Few statistics will put the opportunity in perspective:
• By 2030, there will be about 70 million older Americans, more than doubling the 1990 number. In the year 2000, about 13 percent of the population will be 65-plus. In 2030, that rate will increase to 20 percent, or one in every five Americans. (U.S. Census Bureau)
• 47% of seniors over age 65 own life insurance. (Bernstein Research Call)
• 59% of life settlement clients are between ages of 71-80. (National Underwriter)
• 20% of a policy’s face amount is the average payout to life settlement sellers. (Deloitte Development LLC)
The numbers are staggering:
• Approximately $431 billion of life insurance in force
• 88% of Universal Life policies never result in a claim
• Approximately $15 billion worth of Life Settlement transactions will occur this year.
• That figure is a 100% increase over last year. Another 100% increase is expected next year.
• The market is expected to grow to over $160 billion over the next several years.(Bernstein Research Report, June 2005)

Boaz Arbel is the general manager of Arbel Life , LLC a New York based company that specialized in the high net worth senior market.
To get more information about Life insurance Premium Finance, Life Settlement and to read more articles about the subject please visit Arbel Life, LLC web site at www.arbellife.com

Carrier Approved Life Insurance Premium Financing

2008-08-14T13:21:00.003-04:00

Carrier Approved Life Insurance Premium Financing

By Boaz Arbel , NY www.arbellife.com Lots of high net worth senior citizens find the need to purchase a high face value life insurance policy to protect their family or for the purpose of estate planning. Individuals who in possession of major assets who does not wish to liquidate their properties and investments to pay expensive life insurance premiums have the opportunity of having their premiums financed through a Carrier Approved Life Insurance Premium Finance Program. By having a major bank pay the life insurance premiums, the insured frees up his assets to be used more proficiently in other places. With no (or very little) out of pocket expenses, personal guarantees and minimum financial risk a qualifying person can give millions to his family or Alma matter in the form of a death benefit. Using Carrier Approved Life Insurance Premium Finance Program also lowers out of pocket expenses and potential gift taxes.

Lots of senior citizen utilized the option of finance a new life insurance policy as part of their estate planning. Through lending funds to make premium payments, insured may have the capacity to acquire new policy without reducing cash assets or savings while getting their full insurability which includes illiquid assets such as real estate.

Life Insurance Premium Finance Qualification

· 70 years of age or older (Male and Female)

· Above average health condition

· Minimum net worth of $5,000,000

Premium Finance Programs Available

Recourse premium financing is now the most accepted type of carrier approved premium financing program. The main distinction between partial and non-recourse is an additional collateral requirement on top of the policy that must be posted by the insured. On top of the policy, an additional collateral amount of 25% to 100% of the current outstanding loan value in the form of personal guarantee or letter of credit is required by the premium finance company. Carrier approved program that the insurance companies have reviewed the programs and have generally approved the premium finance companies program structure and agree to issue policies under the program. The programs come with a variety of loan terms of 2, 3, 5, 7 and 10 years in addition to a lifetime loans. The rates may vary but are generally variable or fixed and tend to be lower than the non recourse loan offered by some investors and 3^rd parties. Partial-recourse programs are usually available to insured’s over the age of 70 with at least a $5,000,000 in net worth.

Reasons for applying to the Carrier approved Premium finance program

No need to execute high performing investments.

Maintain cash on hand.

Maintain current cash flow.

Part of an estate tax plan.

Provide a legacy benefit.

Full utilization of your insurability

The process

Submission of informal application and HIPAA to release medical information. All information is being gathered and submitted to insurance companies who rate the proposed insured for eligibility for coverage. Once proposed insured has been approved by the insurance company, premium finance companies will offer loans to finance the premium and the policy will be issued into an irrevocable life insurance trust, or ILIT. Policy owner will name beneficiaries of the life insurance policy which may be a, children, spouse, business partners or charity

After that initial loan amount is dispersed to the ILIT which pays the premium on the life insurance policy. As future premium payments to the insurance company are required, Lender Company continues to pay funds according to the premium time table.

Once the loan get to its maturity the borrower may have a number of options including the continuing to finance the premiums by themselves, repaying the loan plus interest and keeping the life insurance policy or selling the policy in the secondary market for life insurance using the life settlement method. If the insured passes away during the finance period the beneficiaries will get all proceeds and will pay back the loan

Boaz Arbel is the general manager of Arbel Life , LLC a New York based company that specialized in the high net worth senior market.

To get more information about Life insurance Premium Finance, Life Settlement and to read more articles about the subject please visit Arbel Life, LLC web site at www.arbellife.com

What is a : Life Settlements- Life Settlement- Senior Settlement

2008-08-11T09:53:00.000-04:00

What is a : Life Settlements- Life Settlement- Senior

Settlement

“Get Cash Now For Your Unneeded Life Insurance Policy”

Life Settlements help life insurance policy owners and their loved once the opportunity to sell their policies in exchange for a large cash payment, that is larger than the cash surrender value, if any, offered by the life insurance company. The majority life insurance policies are obtained to care for loved ones and to protect them from the uncertainty in life. The majority of these policies are never needed and results with no claim (88%). Once the policies have provided their valuable purpose, the owner either allows them to lapse or give up the policies to the insurance company for cash surrender value. The current growth of the Secondary Life Insurance Market provides the policy owner and insured, a chance to walk away with a large amount of money.

Life Settlement - Life Settlements – Senior Settlement

“Get Cash Now For Your Unneeded Life Insurance Policy”

“Unlock the hidden value of your term or permanent life insurance”

What is a Life Settlement?

A life settlement is the sale of a life insurance policy for a large cash payment that is better than the policy’s cash surrender value,

A life settlement is defined as a financial transaction in which a policy owner holds an unwanted or not needed life insurance policy and sells the policy to a funder who represents a bank or large institutions.

The purchaser becomes the new owner and beneficiary of the policy and is responsible for all following premium payments.

Life Settlement Qualification

· 70 years of age or older ( Male and Female )

· Minimum face value of $500,000 (No Maximum)

· Policy is more than 2 years old

· Premium on the policy are less than 5% of the policy face value

· Cash surrender (if any) is less than 15% of the policy face value

· Types of policies : Universal Life , Whole Life , Term ( Only if convertible )

· Life expectancy greater than 2 years but less than 15 years

The process

Application - Insured and policy owner sign an application giving Arbel Life, LLC the right to gather medical information in order to determine eligibility and pricing for the settlement.

Evaluation -All material and evaluations gathered by Arbel Life, LLC are submitted to all licensed and regulated providers in order to get the best offer on the policy

Negotiation - Arbel Life, LLC will negotiate the offers with the providers and the client for fast and best results.

Contract – once agreed on a purchased price for the policy a contract will be formed by the buyer. Arbel Life, LLC will make sure everything is being done correctly and all funds are being secure and ownership on the policy is being transferred and client is being paid.

Reasons for selling the policy

Children are all grown up and doing well

Need cash for retirement

Eligible for better performing product

Need funds for Investment

Premium on policy become to be very expensive

Change in your estate structure and worth

Divorce or outlive the beneficiaries

Need large amount of cash and do not want to liquidate assets and savings

Want to give large amount of money for charity while alive

Help beneficiaries before passing away.

A company key person insurance policy is no longer needed

The life insurance coverage is related to an obsolete buy/sell agreement

Case studies

Female: 79
Policy Type: Universal Life
Face Amount: $750,000
Cash Value: $107,000
Life Settlement cash paid to customer: $150,000

Male: 70
Policy Type: Convertible Term Life
Face Amount: $500,000
Cash Value: $0
Life Settlement cash paid to customer: $95,000

Male: 86
Policy Type: Universal Life
Face Amount: $1,000,000
Cash Value: $155,000
Life Settlement cash paid to customer: $450,000

Boaz Arbel is the General Manager at Arbel Life, LLC, a New York based company that specializes in the high net worth senior market. To obtain further information about Life insurance Premium Finance, Life Settlement and to read additional articles about these subjects please visit the website: http://www.arbellife.com/

You may also read all publications at http://1800pf.blogspot.com/

Life Settlement - The Untold Numbers about this industry

2008-08-08T16:58:00.000-04:00

When I first looked into the life settlement industry back in 2003 it was something I was not familiar with and I research the field due to a person I know and

brokered the sale of a large portfolio consisted 200 policies of viaticle cases. The person I know made a fortune off this one deal and today he is a very

successful businessman who turned this one deal results to a one man business empire. As of now, he is not involved in this industry and mainly trusts

me and my company to provide him with the right and most accurate updates about the industry and its regulations. Lately, he approached me in an

unusual manner asking very specific questions about the industry. I was kind of surprised from the fact that a 34 year old self made millionaire with a net

worth of more than $25,000,000 shows such interest in my industry. Are coming back? I asked. "Yes" he answered.

The life Insurance Life Settlement Industry is growing very fast and each year more and more professionals understand the potential in this industry and

offer their clients with the Life Settlement option.

What is a Life Settlement?

A life settlement is the sale of a life insurance policy for a large cash payment that is better than the policy's cash surrender value,

A life settlement is defined as a financial transaction in which a policy owner holds an unwanted or not needed life insurance policy and sells the policy to a

funder who represents a bank or large institutions.

The purchaser becomes the new owner and beneficiary of the policy and is responsible for all following premium payments.

Life Settlement or Life Settlements, also known as senior settlement Is a concept that getting more and more popular among people who do

not want continues paying the premiums for their unneeded / unwanted life insurance policy

Reasons for selling the policy

· Children are all grown up and doing well

· Need cash for retirement

· Eligible for better performing product

· Need funds for Investment

· Premium on policy become to be very expensive

· Change in your estate structure and worth

· Divorce or outlive the beneficiaries

· Need large amount of cash and do not want to liquidate assets and savings Want to give large amount of money for charity while alive

· Help beneficiaries before passing away.

· A company key person insurance policy is no longer needed

· The life insurance coverage is related to an obsolete buy/sell agreement

Recent articles, surveys and research show that this industry is yet to reach it full capacity and will grow tremendously in the next few years

Few statistics will put the opportunity in perspective:

· By 2030, there will be about 70 million older Americans, more than doubling the 1990 number. In the year 2000, about 13 percent of the population will be

65-plus. In 2030, that rate will increase to 20 percent, or one in every five Americans. (U.S. Census Bureau)

· 47% of seniors over age 65 own life insurance. (Bernstein Research Call)

· 59% of life settlement clients are between ages of 71-80. (National Underwriter)

· 20% of a policy's face amount is the average payout to life settlement sellers. (Deloitte Development LLC)

The numbers are staggering:

· Approximately $431 billion of life insurance in force

· 88% of Universal Life policies never result in a claim

· Approximately $15 billion worth of Life Settlement transactions will occur this year.

· That figure is a 100% increase over last year. Another 100% increase is expected next year.

· The market is expected to grow to over $160 billion over the next several years.(Bernstein Research Report, June 2005)

Boaz Arbel is the general manager of Arbel Life, LLC a New York based company that specialized in the high net worth senior market. To get more information about Life insurance Premium Finance, Life Settlement and to read more articles about the subject please visit Arbel Life, LLC web site at http://www.arbellife.com

2008-06-09T23:12:00.000-04:00

Life Settlement or Life Settlements, also known as senior settlement
Is a concept that getting more and more popular among people who do not want continues paying the premiums for their unneeded / unwanted life insurance policy

Recent articles, surveys and research show that this industry is yet to reach it full capacity and will grow tremendously in the next few years

Few statistics will put the opportunity in perspective:
· By 2030, there will be about 70 million older Americans, more than doubling the 1990 number. In the year 2000, about 13 percent of the population will be 65-plus. In 2030, that rate will increase to 20 percent, or one in every five Americans. (U.S. Census Bureau)
· 47% of seniors over age 65 own life insurance. (Bernstein Research Call)
· 59% of life settlement clients are between ages of 71-80. (National Underwriter)
· 20% of a policy’s face amount is the average payout to life settlement sellers. (Deloitte Development LLC)
The numbers are staggering:
· Approximately $431 billion of life insurance in force
· 88% of Universal Life policies never result in a claim
· Approximately $15 billion worth of Life Settlement transactions will occur this year.
· That figure is a 100% increase over last year. Another 100% increase is expected next year.
· The market is expected to grow to over $160 billion over the next several years.(Bernstein Research Report, June 2005)

Here is a search I conducted on Google to check the popularity of life Settlement Vs. life insurance, real estate, dentist and dermatologist.
The results show that this is a young industry that will get bigger and bigger

Google search Facts

about 866,000 for life settlements
about 2,820,000 for life settlement
about 255,000 for senior settlement
about 271,000 for life insurance premium finance
of about 481,000 for life insurance premium financing

about 56,100,000 for life insurance
about 3,470,000 for life insurance agents
about 657,000,000 for real estate
about 36,800,000 for dentist
about 6,610,000 for dermatologist

Life settlement

A life settlement is a financial transaction in which a policy owner possessing an unneeded or unwanted life insurance policy sells the policy to a third party for more than the cash value offered by the life insurance company. The purchaser becomes the new beneficiary of the policy at maturation and is responsible for all subsequent premium payments.
Life settlements are an important development in that they have opened a secondary market for life insurance in which policy owners can access fair market value for their policies, rather than accepting the lower cash surrender value from the issuing life insurance company.
Generally speaking, life settlements are an option for high-net-worth policy owners age 65 or older. Independent estimates report that among this group, 20% of policies have a market value that exceeds the cash value offered by the carrier. And while many policyowners are unfamiliar with life settlements until a financial professional mentions the option to them, the concept has gained attention from high-profile proponents such as Warren Buffett, former U.S. Representative Bill Gradison, and numerous media sources including The Wall Street Journal, Time Magazine, Business Week and The Economist. A growing number of experts now believe that informing clients about offering life settlements should fall under the fiduciary duty of a financial adviser.

How It Works

In a life settlement transaction, there is a chain leading from the seller of the policy to the end buyer of the policy (known as a life settlement provider). Each link in the chain has a different responsibility in facilitating the transaction and ensuring that it runs smoothly, while outside vendors typically assist the provider with specialized functions.
Financial Advisers
Life settlements are complex financial transactions that are generally conducted on behalf of clients by experienced professional advisers. Some examples of advisers that are becoming

increasingly involved in the life settlement arena are:

Accountants/CPAs
Attorneys
Financial Planners/CFPs/ChFCs/CFCs
Wealth Managers
Insurance Advisors
Estate Planners/CEPs
Certified Senior Advisors/CSAs
Charitable Trust Officers

Providers

Life settlement providers serve as the purchaser in a life settlement transaction and are responsible for paying the client a cash sum greater than the policy's cash surrender value. The top providers in the industry fund many transactions each year and hold the seller's policy as a confidential portfolio asset. They are experienced in the analysis and valuation of large-face-amount policies and work directly with advisors to develop transactions that are customized to a client's particular situation. They have in-house compliance departments to carefully review transactions and, most importantly, they are backed by institutional funds.
Life Settlement providers must be licensed in the state where the policy owner resides. Approximately 41 states have regulations in place regarding the sale of life insurance policies to third parties.

Brokers

Financial advisors who choose not to submit cases directly to a settlement provider may opt to work through a life settlement broker. Life settlement brokers are intermediaries who bring together policyowners who wish to sell a policy and providers seeking to purchase them. Brokers, in exchange for a fee, will shop a policy to multiple providers, much as a real estate broker solicits multiple offers for one’s home. Not all buyers are alike and a life settlement broker will help ensure that cases are sold to reputable buyers who are likely to close without significant difficulties. It is unlikely a financial advisor will achieve the highest possible price without going through an experienced life settlement broker.
While it is the broker's duty to collect bids, it is still incumbent on the advisor to help the client evaluate the offers against a number of criteria including offer price, stability of funding, privacy provisions, net yield after commissions, and more.
Compensation arrangements vary significantly and should be fully disclosed and understood to determine if engaging a broker will benefit the client. In many states, brokers must be licensed to do business in that state. Industry experts state: "It is imperative that the client works with a licensed broker who has the experience to deal with sophisticated institutional buyers to yield the highest price."
In regulated states there are material regulations as to procedure, privacy, licensing, disclosure and reporting which must be met and which in some cases carry criminal penalties. A licensed life settlement broker can help you meet all relevant requirements.

Investors / Risk takers

Life settlement investors are known as financing entities because they are providing the capital or financing for life settlement transactions (the purchase of a life insurance policy). Life settlement investors may use their own capital to purchase the policies or may raise the capital from a wide range of investors through a variety of structures. The life settlement provider is the entity that enters into the transaction with the policyowner and pays the policyowner when the life settlement transaction closes. In most cases, the life settlement provider has a written agreement with the life settlement investor to provide the life settlement provider with the funds needed to acquire the policy. In this scenario, the life settlement investor is effectively the ultimate funder of the secondary market transaction. However, in some life settlement transactions, the life settlement provider is also the investor; the provider uses its own capital to purchase the policy for its own portfolio.

Other Involved Parties

Underwriters/Life Expectancy Providers - Provide life expectancy estimates on the insured for pricing purposes. There are four major life expectancy providers, namely 21st Services, AVS, Fasano, and ISC Services.

Some underwriters provide unreasonably short life expectancies by using base tables that are 5 years out of date, ignoring future mortality improvements & current treatments Eg Statins and basing life expectancies on life manuals which are conservative for mortality and not longevity risk. Others apply actuarial analysis to the most recent available data as well as their own experience to develop their base tables and underwriting manuals.
Providers who do not provide short life expectancies are shunned by originators whom are primarily remunerated for volume. Providing more reasonable life expectancies does not inflate the apparent value in these insurance policies. This results in fewer cases being written and less support from originators.

There are no experience studies publicly available which support the accuracy of any of the major life settlements underwriters.
Tracking Agents - Tracking agents provide information to investors regarding the whereabouts and mortality status of each insured. Tracking agents use a variety of methods to collect this type of information such as phone, email, mail, and the social security database. Most tracking agents also provide premium management, death claim processing (collecting the death benefit from the insurance company once the insured has expired) and reporting services.
Steps in a Transaction

Policyowner consults with an advisor, decides to sell his or her policy.
Policy owner and advisor decide whether to work with broker or to go directly to providers.
Client & advisor submit policy for valuation. Client releases medical information.
If policy meets criteria for a life settlement, providers send offers directly or through a broker.
Client and advisor review offers and client accepts his preferred offer.
Client and advisor complete the provider's closing package, and return essential documents.
Provider places cash payment in escrow and submits change of ownership forms to the insurance carrier.

Paperwork is verified and funds are transferred to the policy seller.
Life Settlement History
Although the secondary market for life insurance is relatively new, the market was more then a 100 years in the making. The life settlement market would not have originated without a number of events, judicial rulings, and key individuals.
The Policy as Transferable Property

The Supreme Court case of Grigsby v. Russell (1911) established the policyowner’s right to transfer an insurance policy. Justice Oliver Wendell Holmes noted in his opinion that life insurance possessed all the ordinary characteristics of property, and therefore represented an asset that a policyowner could transfer without limitation. Wrote Holmes, “Life insurance has become in our days one of the best recognized forms of investment and self-compelled saving.” This opinion placed the ownership rights in a life insurance policy on the same legal footing as more traditional investment property such as stocks and bonds. As with these other types of property, a life insurance policy could be transferred to another person at the discretion of the policyowner.
This decision established a life insurance policy as transferable property that contains specific legal rights, including the right to:
Name the policy beneficiary
Change the beneficiary designation (unless subject to restrictions)
Assign the policy as collateral for a loan
Borrow against the policy
Sell the policy to another party

A second milestone occurred in 2001 when The National Association of Insurance Commissioners (NAIC) took a crucial step by releasing the Viatical Settlements Model Act defining guidelines for avoiding fraud and ensuring sound business practices. Around this time, many of the life settlement providers that are prominent today began purchasing policies for their investment portfolio using institutional capital. The arrival of well-funded corporate entities transformed the settlement concept into a regulated wealth management tool for high-net-worth policyowners who no longer needed a given policy. Strong demand for life settlements policies is driving a rapid market expansion that continues today.
Major Study Findings

One major study that showed some of the potential of the life settlement market was conducted by the University of Pennsylvania business school, the Wharton School. The research papers, credited to Neil Doherty and Hal Singer, were released under the title "The Benefits of a Secondary Market For Life Insurance." ([1]) This study found, among other things, that life settlement providers paid approximately $340 million to consumers for their underperforming life insurance policies, an opportunity that was not available to them just a few years before.
"We estimate that life settlements, alone, generate surplus benefits in excess of $240 million annually for life insurance policyholders who have exercised their option to sell their policies at a competitive rate." - Wharton Study, pg 6

Another study, perhaps even more influential, was the Conning & Co. Research study "Life Settlements: Additional Pressure on Life Profits." This study found that senior citizens owned approximately $500 billion worth of life insurance in 2003, of which $100 billion was owned by seniors eligible for life settlements. Since 2003, more and more of these eligible senior clients have sold their policies and helped the market increase.

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