The world's largest life settlement trade organization is celebrating a monumental anniversary. The Life Insurance Settlement Association's 20th Annual Spring Life Settlement Conference will combine a look back at the industry's rich past with innovative perspectives on the future. Even though LISA has been around for two decades, life settlements have a much longer history. Speakers will address hot-button issues, including the topics below.
Customers and Policies
The first life settlements occurred in the late 1980s as a type of cash advance for terminally ill AIDS patients. Over the next decade, settlements began to include seniors who were not necessarily terminally ill but did suffer from serious diseases. The face value of the average policy had been $2.2 million. Today's life insurance settlements also focus on elderly adults with chronic or debilitating illnesses. While settlement companies have traditionally shunned policies worth less than $500,000, advances in actuarial modeling have made even $100,000 policies more desirable.
Regulations and Oversight
The senior settlement industry was once known as the "Wild West" due to the lack of sufficient regulatory control at the time. Some states oversaw settlement transactions as securities while others lumped them into the same category as life insurance. Unscrupulous brokers gave seniors cash or gifts to set up insurance contracts. Some so-called brokers even trapped seniors in unethical financing deals so they would have no choice but to sell their new policies.
Today, 42 states plus Puerto Rico have helped to kick out the con artists and transform the life settlement industry into a regulated environment. Stranger Owned Life Insurance, or STOLI, transactions have been outlawed. New developments continue to come out of the National Conference of Insurance Legislators, the National Association of Insurance Commissioners and other organizations. Seniors, investors and life settlement companies have all gained peace of mind. All parties can make informed decisions without worrying about rampant fraud or deception.
Opportunities and Growth
LISA members continue to see exciting developments in viatical and non-viatical life settlements:
- Texas has become the first state to legislate Medicaid life settlements. Older adults can sell their life policies for more than the surrender value, keep the proceeds in a healthcare trust and still be treated as private payers with regard to long-term care expenses. New York, New Jersey and Florida are considering similar laws.
- Actuarial Standards of Practice Number 48 lends consistency to life settlement mortality calculations. The guideline helps to define actual-to-expected death ratios across different categories and time periods.
- Hybrid insurance contracts, unsecured loans and long-term care benefit riders may help more people keep their policies, but they also provide opportunities for innovation in the settlement industry.
- Public education campaigns, industry collaboration and better customer relationships may provide the keys to increasing awareness about life insurance settlement options.
As always, LISA's Spring Life Settlement Conference will be fun and informative. Guests can take advantage of meet-and-greets and cocktail receptions to make new acquaintances and strengthen old relationships. This year's keynote speaker will be Senator Bob Casey of Pennsylvania, a strong advocate of fair life settlement legislation at the federal level. The 2014 conference will be held April 30 through May 2 at the Marriott Wardman Park in Washington, D.C.
