Life insurance life settlements have been active in the United States for almost 20 years. The industry got its start with the AIDS epidemic in the 1980’s. When AIDS was no longer a death sentence, and death claims far less predictable, the industry moved to senior settlements.
The problem has always been the absence of regulation. The life industry was against settlements from the beginning and they did everything they could do to stop them. The reason for this was simple. The life industry is not in the business of paying death claims. The life industry liked to settle their own contracts and they accomplished this by paying the contract owner the cash value or allowing him to convert to one of their non-forfeiture options.
Life insurance life settlements provide far greater cash settlements than that offered by the insurance company. On average the settlement industry pays five times more for a contract than the contract cash value. This also means that the contract will result in a death claim as the buyer recoups his investment at the death of the insured.
New York and California, the most populous states in the country, have finally provided regulations for the purchase of insurance policies in their states. These regulations will now provide an incentive for residents of those states to take a longer look at the advantages of life insurance life settlements.
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