Health & Life Insurance Actuaries | Lewis & Ellis Inc.

Life settlements could help consumers going forward

Life Settlements
by Tim DeMars
Life settlements could help consumers going forward
Life settlements could help consumers going forward

Over the last few years, while the life insurance industry as a whole has been spinning its wheels trying to recover from the economic downturn, the life settlement sector of it has taken some significant steps forward. As a result, more Americans are starting look at the efficacy of life settlements as they might apply to their personal financial situations.

In recent years, data has shown that millions of Americans have allowed their life insurance policies to lapse for any number of reasons, leaving hundreds of billions of dollars on the table altogether, according to a report from Life Health Pro. This is, obviously, where life settlements come in, because people who know they're about to let their long-held policies lapse might now be aware that more options exist than just letting things fall away.

However, because of how the industry is moving, there might be a need for greater understanding on the part of the agents trying to complete such a transaction, the report said. Frankly, they ought to be able to find the best deals possible for their clients by creating something of a bidding war.

Understanding the market is key
The fact of the matter is that some agents might not have the best ideas about how they can maximize the value of a life insurance policy that's about to lapse, the report said. In the past, that hasn't necessarily been their role in the process, but as the market for life settlements evolves, so too does the means by which these transactions are completed. Therefore, agents who have found themselves a little uncertain of how to proceed in this new environment might need to take the time to better understand what they're dealing with, and what they can do to better navigate those unfamiliar waters.

That should include taking a closer look at how they value consumers' policies versus what the market for them may be, the report said. Obviously, fair value is whatever the market will bear, to some extent, but at the same time, the kinds of bids that funders will make can vary widely, sometimes by hundreds of thousands of dollars. But over time, a fairly clear picture will emerge; a policy for "x" number of dollars is worth "y" in a settlement.

The more those in the business can do to highlight to consumers the benefits of a life settlement, the more likely they're going to be to have success going forward.



Consultants to Contact