Assessing Clients' Life Settlement Offers

Katt, Peter C.
July 2002
Journal of Financial Planning;Jul2002, Vol. 15 Issue 7, p36
Academic Journal
This article examines the value of life settlements to clients. Life settlement firms and proponents always refer to the sale of life insurance policies that are no longer needed. Often, life insurance policies move from the needed to the wanted category as children have become independent or a family business is sold. Life settlement firms readily point out that life settlements almost always involve the affluent who can continue paying life insurance premiums. For those few who sell their policies because of their inability to continue paying premiums, selling their policy may be a rational choice. Because life expectancy refers to approximately half dying before and half after the specified time, in the aggregate, life settlement firms should achieve the investment return they plan for. But each individual insured will have different financial results depending on which side of the average they fall, which is why it is important to evaluate the financial prospects so each potential policy seller can assess the potential advantages and disadvantages according to their own view. Have an independent financial analysis done before a policy is sold. The life settlement firm is not in the business to determine what is in the best interests of prospective sellers. It is naturally pursuing its own financial interests.


Related Articles

  • Turning the Table.  // Best's Review;Oct2004, Vol. 105 Issue 6, p114 

    Reports that the 2001 Commissioners Standard Ordinary mortality table will lead to the introduction of new types of life insurance policies. U.S. Treasury Department's requirement on life insurance companies to use this table for their tax computations; Increase in life expectancy; Reduction in...

  • Survivorship Whole Life Insurance: An Analysis of the Underlying Assumptions and the Associated Risks Confronting the Corporate Insurance Buyer. Glass, Richard D.; Johnson, Selina P. // Benefits Quarterly;1991 First Quater, Vol. 7 Issue 1, p30 

    Throughout the U.S., life insurance is utilized as both an employee benefit and a financial tool. Some companies frequently use corporate-owned life insurance (COLI) to recover the costs of their nonqualified deferred compensation programs. Other firms use COLI to redeem employee stock and to...

  • American General Unveils Variable Policy.  // American Banker;5/4/2006, Vol. 171 Issue 85, p9 

    The article looks at American General Life Insurance Co.'s variable universal life insurance policy. Platinum Investor VIP features a guaranteed minimum withdrawal benefit rider. For an additional fee the rider offers both a guaranteed death benefit and a guaranteed stream of income during...

  • Guest Editorial - Peace of mind and financial security.  // Asia Insurance Review;Feb2011, p4 

    The article reports on the performance of the life insurance industry in Singapore in 2010. It is noted that the quality of sales advisory services provided by various insurance intermediaries was reflected in the persistency rates of in-force business that remained high at above 95%. It is...

  • Settlement Life Expectancy Reports Likened To 'A Ticking Time Bomb'. Brady, Matt // National Underwriter / Life & Health Financial Services;11/12/2007 Life Settlements, Vol. 111, pS12 

    The article discusses the growing concern regarding life expectancy reports as investors and other players in life settlement transaction are seeing the impacts of variances in life expectancies on pricing of policies in the secondary markets in the U.S. The author believes that life settlement...

  • Getting A Better Handle On Older Age Mortality. KLEIN, ALLEN; PUMMER, STEVE; TAHT, MICHAEL // National Underwriter / Life & Health Financial Services;8/8/2005, Vol. 109 Issue 30, p17 

    Discusses the need for life insurance companies to better handle the level of mortality they can expect at the older ages to improve underwriting practice in the United States. Association between longer life spans and an increase in life insurance coverage at the older ages; Tight underwriting...

  • Breathing Life Into Long-Term Care. Schmidt, Channing // Best's Review;Nov2011, Vol. 112 Issue 7, p82 

    In this article the author discusses aspects of sales of life insurance in long-term care sector. He states that demand for insurance coverage for long-term care costs in increasing due to growing life expectancies and health care costs. He explains that long-term care coverage options are...

  • cut we cut the cost of your life insurance?  // Pulse;2/22/2007, Vol. 67 Issue 7, p74 

    The article surveys if companies can cut the cost of life insurances in Great Britain. Considering that premium rates for all forms of life protection insurance is under constant review and companies continually vying to be the most competitive, it is also important to find out if one's...

  • How Insurers Might Compete With The Secondary Market. Cook, David // National Underwriter / Life & Health Financial Services;9/18/2006, Vol. 110 Issue 35, p14 

    The article discusses several ways for insurance companies to compete in life settlement market in the U.S. It provided several strategies which will improve the characteristics of the market, wherein life insurance companies that issued policy had no financial influence during settlement...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics