Life Settlements: A Viable Remediation Option for Problematic Life Insurance Policies
Life settlements are a recognized policy remediation option that should be presented to senior insured clients prior to the lapse or surrender of an existing policy. Many life insurance policies will not receive life settlement offers due to certain characteristics of the policy or health of the insured. EnTrust Settlements will evaluate all cases and provide supporting documentation to properly pre-qualify a policy and determine its feasibility on the secondary market.
NCOIL Life Insurance Consumer Disclosure Model Act
The National Conference of Insurance Legislators (NCOIL) passed the Life Insurance Consumer Disclosure Model Act in November 2010 which mandates insurers to disclose options, including a life settlement, when senior policyholders contemplate surrender or lapse of their policy. The purpose of this legislation is to provide consumer protection from unnecessary lapse or surrender. So far, six states including Kentucky, Maine, New Hampshire, Oregon, Washington and Wisconsin require disclosure of policyholders’ options. Similar legislative action is anticipated to pass in most states.
EnTrust Settlements believes this model act sets forth a precedent that should be noted by fiduciaries. Fiduciaries are held to a higher standard of care and should use this act to obtain guidance on internal policies and procedures. Providing Grantors and Beneficiaries with the knowledge of the life settlement option prior to policy lapse or surrender protects the fiduciary from future liability while allowing senior trust clients the opportunity to investigate an additional way to maximize the value of trust held assets.
Prior to closing a life settlement, EnTrust Settlements will provide the fiduciary with a settlement analysis called SETTLETRACK™ which is completed by RIC, a nation leading risk manager for life insurance. This report summarizes the proposed settlement’s transaction costs, the competitiveness of the purchase offer, provides a gain/loss analysis and Provider evaluation. Additionally the bid history and life expectancy opinions are all disclosed in this analysis.