The Role of Life Settlement Services Support
To obtain the best life settlement offer, policysettlement.com must rely on other players to provide life settlement services support. These supporting life settlement services are often performed at different steps of the process.
Why Understanding and Cooperation Yields the Best Life Settlement Offer
Because of the differing interests of the other players involved, obtaining the best life settlement offer requires us to possess a thorough understanding of the entire process and the ability to work as part of a team.
The Life Settlement Services Support Players
- Insurers
- Life insurance companies began during the middle ages. Despite insurer's efforts to curb life settlements, the US courts confirmed a policy owner's right to sell their life insurance policy to an unrelated third policy after it has been issued.
- Agents
- Life insurance agents can act as life settlement agents under the direction of a life settlement broker. In some states, life agents are pre-qualified to act as settlement brokers because a life insurance license is the only broker requirement in those states.
- Brokers
- A life settlement broker's primary role is to negotiate the sale of a life insurance policy by the policy owner to the buyer. It is commonly accepted they owe a fiduciary responsibility to the policy owner. For this reason, consumers need to understand everything about life settlement broker's duties, responsibilities, and compensation structures before proceeding.
- Providers
- A life settlement provider represents the buyer in funding life settlement transactions. Sometimes they are the actual buyer and use their own money to acquire policies for their own portfolio, re-sale to others, or use in securitization transactions.
- Buyers
- Life settlement buyers have also been called funders, purchasers, financing entities, or investors. We refer to them as either funders or buyers. They are typically large financial institutions such as investment banks, hedge funds, and international banks.
- Auctions
- A life settlement auction or life settlement exchange is a new innovation to the US settlement market but has existed in Great Britain for over 100 years. It enables policy owners with the help of advisors to sell policies in a secure online environment that functions similar to a reserve auction.
- Longevity
- Longevity estimates are completed by independent life expectancy providers on insured's of policies proposed for life settlements. They are used by buyers to value a policy for a life settlement. Each longevity estimate is based on a hypothetical mortality curve of 1,000 people whose age and medical conditions are the same as the insured's. It predicts the probability of the insured surviving to various ages.
- Ratings
- Life insurance company rating services determine the financial strength and claims paying ability of life insurance companies. Their opinions are important to prospective buyers who consider ratings an indicator of a life insurance company's ability to pay future claims. Some services also rate life settlement securities and life settlement providers.
- Regulators
- Various state and federal entities share regulatory oversight over the life settlement industry. As of January of 2009, only eight states and DC do not have life settlement laws. Existing laws are based primarily on variations of two model life settlement regulations. These models were created by the National Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legislation (NCOIL). A few regulated states have created their own unique life settlement regulations.
- Associations
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Life settlement association and insurance associations help contribute to a vibrant and more transparent life settlement market.
They exist to serve their members and the needs of policy holders the members serve through their efforts to:
- Improve awareness, knowledge, confidence, and choices
- Foster greater transparency and disclosure
- Prevent fraud and dishonesty
- Promote sound, consistent regulations and instill best standards of practice
- Accelerate responsible growth
- Promote industry unity among all stakeholders
- Research
- Independent life settlement research firms are recognized experts that have been sought out to analyze the industry and forecast its future growth potential. They also forecast the impact growth and stagnation could have on the industry. While some just concentrate on research, others focus more on education that results from research.
- Advisors
- Various professionals often serve as life settlement advisors. They include life insurance agents, financial planners, attorneys, accountants and trust officers. Those who are experts in their field should be able to performs certain specific tasks better than others and work as part of a team which includes other experts who perform different tasks. Whenever possible, the policy owner or an impartial representative should function as the life settlement team leader, weighing input from all team members before making decisions.
- Investors
- We refer to life settlement investors as individuals (not institutions) who purchase shares in securitized life settlement pools or fully diversified life settlement funds. They do so in anticipation of receiving steady non-correlated returns and predictable liquidity through an investment with understandable and measurable risks.
We do not, however, advocate an individual life settlement investor buying individual policies when there is no insurable interest. We believe those transactions are contrary to the best interest of the insured whose timely death could become necessary (and possibly encouraged) for the investor (or a subsequent investor) to receive their expected return.