Life Settlements

Life settlements are complex financial transactions.

What is a life settlement, how does it work, is a life settlement right for me?

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.

• Life settlements trade raises complex issues:

The direct market for TLPs, also known as life settlements, is based mainly on US "whole life" policies. Unlike term assurance, which runs for a fixed period, whole life policies last a lifetime and in most cases are assignable. This means a third party can buy the policy, maintain the premiums, and receive the benefits on the original policyholder's death. The success of the investment, therefore, will depend largely on the accuracy of the medical or life expectancy report, on which the sale price is based. Investors focus on policyholders who are 65 or over and have a medical condition that reduces their life expectancy to between three and 15 years. Policyholders sell for a range of reasons but typically because they genuinely no longer need the cover, or have a pressing need for capital, in which case the circumstances might be classed as a "distress" sale.

Steps in a Life Settlement Transaction

1. Policyowner consults with an advisor and decides to sell his or her policy.
2. Policy owner and advisor decide whether to work with a broker or go directly to providers.
3. Client & advisor will submit the current policy for valuation. Client releases medical information.
4. If the policy meets criteria for a life settlement, providers send offers direct to policy owner or through a broker.
5. Client and advisor review the offers and client makes decision on best offer.
6. Client and advisor complete the provider's closing package, and return all essential documents.
7. Provider places cash payment in escrow and submits change of ownership forms to the insurance carrier.
8. Paperwork is verified and funds are transferred to the policy seller.

Life Settlement Resources:

Life Settlement Solutions, Inc. is one of the largest and most respected life-settlement providers in the industry. A premier firm in the non-viatical life-settlement field, Life Settlement Solutions and its management represent one of the most experienced institutionally funded life-settlement companies, having purchased life insurance policies in excess of $2 billion in aggregate face value to date. Life Settlement Solutions is well known for competitive pricing, strong customer relationships, service, compliance and strict adherence to regulatory requirements. As a leading advocate for industry education, Life Settlement Solutions founded Life Settlement Awareness Month™ to provide valuable training on life settlements for financial professionals. This annual event offers top-of-the-line marketing support, training and industry expertise to improve producer sales activities. For information regarding Life Settlement Solutions, visit www.lss-corp.com.