26 ID Trends NAILBA
Life Settlement Trends
Growing into a mainstream market
Over a century ago in 1911 , a legal case was settled by the U . S . Supreme Court recognizing the standing of life insurance policies as personal property of the owner . In the ruling Grigsby v . Russell , the ownership rights of a life insurance policy were placed on the same legal footing as more traditional property such as real estate . This ruling codified life insurance policies as an asset which , like a home , can be used as collateral or the ownership can be transferred for consideration at the discretion of the policy owner .
Recent years have seen the marketplace evolve into a well-regulated , mainstream financial option with a number of interesting industry trends to consider .
Market snapshot 1
More than 3,000 life settlement transactions completed for approximately $ 4.5B of death benefit settled with $ 750M paid out to policy owners among its member companies .
Of the $ 750M , policy owners received $ 660M above lapse or surrender value with the policy owner receiving on average 7.8x more than available CSV .
Settlement vehicles
Chris Orestis , CSA , is President of Retirement Genius , a nationally recognized financial , health / LTC , and retirement issues expert . Over 25 years ’ experience in insurance and long-term care , he ’ s credited with pioneering the Long-Term Care Life Settlement over a decade ago .
1 2021 Market Data released by the Life Insurance Settlement Association ( LISA )
The financial options for policy owners to use a life settlement today have evolved into a range of creative living benefit solutions to address the unique challenges of retirement , aging and declining health . Lump Sum Cash : A life insurance policy can be settled for a lump-sum cash payment that the policy owner can then use without any restrictions to address their financial needs . Instead of abandoning a policy after years of making premium payments , this provides an opportunity for advisors to increase assets under management with an influx of cash by settling the life policy asset . LTC-Life Settlement : A life insurance policy can be settled to fund a dedicated Long-Term Care Benefit Account . This HSA-like account is set up to protect and manage funds from the LTC-Life Settlement specifically to make monthly payments towards any form of senior living and long-term care services the owner wants . Based on the health underwriting of the policy owner , the funds from the LTC-Life Settlement can be tax-free *. The account owner directs monthly payments towards the care they want and if the insured passes away before the funds in the account are spent down , any remaining balance will transfer to the named account beneficiaries .